Question

Delaware Corp. prepared a master budget that included $16,360 for direct materials, $28,100 for direct labor, $15,900 for variable overhead, and $38,900 for fixed overhead. Delaware Corp. planned to sell 4,090 units during the period, but actually sold 4,300 units. What would Delaware’s direct materials cost be if it used a flexible budget for the period based on actual sales? (Do not round your intermediate calculations.)

Delaware Corp. prepared a master budget that included $16,200 for direct materials, $52,650 for direct labor, $15,200 for variable overhead, and $38,800 for fixed overhead. Delaware Corp. planned to sell 4,050 units during the period, but actually sold 4,360 units. What would Delaware’s direct labor cost be if it used a flexible budget for the period based on actual sales?

Delaware Corp. prepared a master budget that included $20,100 for direct materials, $28,500 for direct labor, $18,090 for variable overhead, and $39,300 for fixed overhead. Delaware Corp. planned to sell 4,020 units during the period, but actually sold 4,350 units. What would Delaware’s variable overhead cost be if it used a flexible budget for the period based on actual sales? (Do not round your intermediate calculations.)

Answer 1

A flexible budget is based on the actual sales level during a period while a master budget is prepared based on the planned sales level during the period.

1. Direct materials cost for actual sales = Direct materials cost as per master budget/units planned to be sold as per master budget x Actual units sold

=> Direct materials cost for actual sales as per flexible budget = $16,360 / 4,090 units x 4,300 units = $17,200

2. Direct labor cost for actual sales = Direct labor cost as per master budget/units planned to be sold as per master budget x Actual units sold

=> Direct labor cost for actual sales as per flexible budget = $52,650 / 4,050 units x 4,360 units = $56,680

3. Variable overhead cost for actual sales = Variable overhead cost as per master budget/units planned to be sold as per master budget x Actual units sold

=> Variable overhead cost for actual sales as per flexible budget = $18,090 / 4,020 units x 4,350 units = $19,575