Question

Flexible Budget with Different Levels of Production

Bowling Company budgeted the following amounts:

Variable costs of production:
Direct materials	3 pounds @ $0.60 per pound
Direct labor	0.5 hr. @ $16.00 per hour
VOH	0.5 hr. @ $2.20
FOH:
Materials handling	$6,200
Depreciation	$2,600

Required:

Prepare a flexible budget for 2,500 units, 3,000 units, and 3,500 units.

Bowling Company
Flexible Budget
	2,500 units	3,000 units	3,500 units
Direct materials	$	$	$
Direct labor
Variable overhead
Fixed overhead:
Materials handling
Depreciation
Total	$	$	$

Answer 1

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	Bowling Company
	Flexible Budget
						Working
		2,500 units	3,000 units	3,500 units		2,500 units	3,000 units	3,500 units
	Direct materials	$                 4,500	$                   5,400	$                 6,300		2500*3*0.6	3000*3*0.6	3500*3*0.6
	Direct labor	$               20,000	$                24,000	$               28,000		2500*16*0.5	3000*16*0.5	3500*16*0.5
	Variable overhead	$                 2,750	$                   3,300	$                 3,850		2500*2.2*0.5	3000*2.2*0.5	3500*2.2*0.5
	Fixed overhead:
	Materials handling	$            6,200	$             6,200	$            6,200		Same as budget	Same as budget	Same as budget
	Depreciation	$            2,600	$             2,600	$            2,600		Same as budget	Same as budget	Same as budget
	Total	$          36,050	$            41,500	$          46,950