Olive Company makes silver belt buckles. The company’s master budget appears in

Question

Olive Company makes silver belt buckles. The company’s master budget appears in the first column of the table.

Required:
Complete the table by preparing Olive’s flexible budget for 4,200, 6,200, and 7,200 units. (Round your intermediate calculations to 2 decimal places.)

Master Budget (5,200 Units) Flexible Budget (4,200 Units) Flexible Budget (6,200 Units) Flexible Budget (7,200 Units) Direct materials $1,040 Direct labor 3,120 Variable manufacturing overhead 1,560 Fixed manufacturing overhead 18,400 Total manufacturing cost $24,120

Explanation / Answer

Direct material cost/unit=(1040/5200)=$0.2/unit

Direct labor cost/unit=(3120/5200)=0.6/unit

Variable overhead/unit=(1560/5200)=$0.3

Note:Total fixed costs and variable cost/unit do not change with change in units.

Master Budget (5,200 Units) Flexible Budget (4,200 Units) Flexible Budget (6,200 Units) Flexible Budget (7,200 Units) Direct materials $1,040 840 1240 1440 Direct labor 3,120 2520 3720 4320 Variable manufacturing overhead 1,560 1260 1860 2160 Fixed manufacturing overhead 18,400 18,400 18,400 18,400 Total manufacturing cost $24,120 23020 25220 26320

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