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1.) Blossom, Inc. prepared the following master budget items for July:Production and sales48,000unitsVariable manufacturing costs: Direct...

1.) Blossom, Inc. prepared the following master budget items for July:Production and sales48,000unitsVariable manufacturing costs: Direct materials$72,000 Direct labor$96,000 Variable manufacturing overhead$120,000Fixed manufacturing costs $200,000Total manufacturing costs$488,000 During August, Blossom actually sold 72,000 units. Prepare a flexible budget for Blossom based on actual sales.

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Expert Solution

Working note 1 - Calculation of budgeted variable cost per unit
Cost per unit
Direct material cost per unit [$72,000 / 48,000 units] $1.50
Direct labor                          [$96,000 / 48,000 units] $2.00
Variable manufacturing overheads    [$120,000 / 48,000 units] $2.50

.

.

Working note 2 - Calculation of budgeted costs at actual sales

Cost per unit

[refer working note 1]

(a)

Total cost at 72,000 units  

( a x 72,000 units)
Direct material cost per unit   $1.50 $108,000
Direct labor                            $2.00 $144,000
Variable manufacturing overheads    $2.50 $180,000
Fixed manufacturing costs $200,000

Note: Fixed cost does not change with the change in the production. So, it remains constant.

.

.

Flexible budget for Blossom based on actual sales
Production and sales 72000 Units
Variable manufacturing Costs:
   Direct materials      $108,000
   Direct labor $144,000
   Variable manufacturing overheads $180,000
Fixed manufacturing cost $200,000
Total manufacturing Cost $632,000

ekkarill92 answered 1 hour ago
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