Gundy Company expects to produce 1,252,200 units of Product XX in 2014. Monthly

Question

Gundy Company expects to produce 1,252,200 units of Product XX in 2014. Monthly production is expected to range from 83,230 to 124,670 units. Budgeted variable manufacturing costs per unit are direct materials $4, direct labor $8, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $2.

Prepare a flexible manufacturing budget for the relevant range value using 20,720 unit increments

Explanation / Answer

Activity Level Finished Units 83230 103950 124670 Variable Costs: Direct Materials 332920 415800 498680 Direct Labor 665840 831600 997360 Overhead 832300 1039500 1246700 Total Variable Costs 1831060 2286900 2742740 Fixed Costs: Depreciation 417400 417400 417400 Supervision 208700 208700 208700 Total Fixed Costs 626100 626100 626100 Total Costs 2457160 2913000 3368840

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