Exercise 15-10 Evaluating a cost center including flexble budgeting concepts LO

Question

Exercise 15-10 Evaluating a cost center including flexble budgeting concepts LO 15-3, 15-4,15-5 Koch Medical Equipment Company makes a blood pressure measuring kit. Albert Kaiser is the production manager. The production department's static budget and actual results for 2015 follow Production in units Direct materiaks Direct labo 22,000 kits 24,000 kits $158,400 136,400 Variable manufacturing overhead33,000 $210,500 141,500 38,100 327,800 202,000 390,100 96,000 Fixed manufacturing overhead Total manufacturing cost $529,800 $586,100 Required a. Convert the static budget into a flexible budget. (Do not round intermediate calculations Production in units Direct materials Direct labor Variable manufacturing overhead Total variable costs Fixed manufacturing overhead Total manufacturing costs 24,000 Kits chamomile-40 149 images (2).jpg ^ chamomile-roman.-Pg ^ pg images (3)jpg Type here to search

Explanation / Answer

a Flexible budget Production 24000 Direct materials 172800 Direct labor 148800 Variable manufacturing overhead 36000 Total variable costs 357600 Fixed manufacturing overhead 202000 Total manufacturing cost 559600 b Variances Direct materials 37700 U Direct labor 7300 F Variable manufacturing overhead 2100 U Total variable costs 32500 U Fixed manufacturing overhead 6000 F Total manufacturing cost 26500 U

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