Gundy Company expects to produce 1,200,000 units of Product XX in 2017. Monthly
ID: 2557216 • Letter: G
Question
Gundy Company expects to produce 1,200,000 units of Product XX in 2017. Monthly production is expected to range from 89,800 to 134,000 units. Budgeted variable manufacturing costs per unit are: direct materials $3, direct labor $7, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $1.
In March 2017, the company incurs the following costs in producing 111,900 units: direct materials $356,700, direct labor $780,300, and variable overhead $1,121,000. Actual fixed costs were equal to budgeted fixed costs.
Prepare a flexible budget report for March. (List variable costs before fixed costs.)
Explanation / Answer
GUNDY COMPANY Manufacturing Flexible Budget Report For the Month Ended March 31, 2017 Difference Budget Actual Fav/unfav/neither fav/nor unfav Units producted 111,900 111,900 Variable costs Direct materials 335700 356,700 21,000 U Direct labor 783300 780,300 3,000 F Overhead 1119000 1,121,000 2,000 U Total variable cost 2,238,000 2,258,000 20,000 U Fixed costs Depreciation 1,200,000*4/12 400000 400000 0 Supervision 100000 100000 0 Total fixed costs 500000 500000 0 Total costs 1,738,000 1,758,000 20,000 U Costs were not entirely controlled,because there is a difference between actual and budgeted variable cost
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