Question

Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and actual overhead costs for March. WATERWAYS CORPORATION Manufacturing Overhead Budget (Static) For the Month of March Budgeted production in units 123,000 Budgeted costs Indirect materials $6,150 Indirect labor 14,760 Utilities 12,300 Maintenance 8,610 Salaries 43,800 Depreciation 16,100 Property taxes 3,000 Insurance 1,200 Janitorial 1,600 Total budgeted costs $107,520 WATERWAYS CORPORATION Manufacturing Overhead Costs (Actual) For the Month of March Production in units 124,000 Costs Indirect materials $6,186 Indirect labor 14,857 Utilities 12,433 Maintenance 8,660 Salaries 43,800 Depreciation 16,100 Property taxes 3,000 Insurance 1,200 Janitorial 1,600 Total costs $107,836 Waterways produced 124,000 units in March rather than the budgeted number of units.

Prepare a flexible overhead budget based on the following amounts produced. (Hint: Indirect materials, indirect labor, utilitites, and maintenance are variable costs. The other budgeted costs are fixed costs.) (Round unit costs to 2 decimal places, e.g. 2.25. List variable costs before fixed costs.)

1) 121,000 units

2) 122,000 units

3)123,000 units

4)124,000 units

5)125,000 units

Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. (List vairble costs before fixed costs.)

Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable.

Answer 1

1.

Overhead budget ( flexible )
Particulars	cost Formulas	121,000.00	122,000.00	123,000.00	124,000.00	125,000.00
Indirect material	0.05	6,050.00	6,100.00	6,150.00	6,200.00	6,250.00
Indirect labour	0.12	14,520.00	14,640.00	14,760.00	14,880.00	15,000.00
Utilities	0.10	12,100.00	12,200.00	12,300.00	12,400.00	12,500.00
Maintainence	0.07	8,470.00	8,540.00	8,610.00	8,680.00	8,750.00
Salaries	43,800.00	43,800.00	43,800.00	43,800.00	43,800.00	43,800.00
Depreciation	16,100.00	16,100.00	16,100.00	16,100.00	16,100.00	16,100.00
Property tax	3,000.00	3,000.00	3,000.00	3,000.00	3,000.00	3,000.00
Insurance	1,200.00	1,200.00	1,200.00	1,200.00	1,200.00	1,200.00
Janitorial	1,600.00	1,600.00	1,600.00	1,600.00	1,600.00	1,600.00
Budgeted costs	0.34q + 65,700	106,840.00	107,180.00	107,520.00	107,860.00	108,200.00

2)

Overhead budget report ( flexible )
Particulars	124000 Budgeted Units	124000 Actual Units	Variance	Remarks
Indirect material	6,200.00	6,186.00	14.00	Favorable
Indirect labour	14,880.00	14,857.00	23.00	Favorable
Utilities	12,400.00	12,433.00	-      33.00	Unfavorable
Maintainence	8,680.00	8,660.00	20.00	Favorable
Salaries	43,800.00	43,800.00	-
Depreciation	16,100.00	16,100.00	-
Property tax	3,000.00	3,000.00	-
Insurance	1,200.00	1,200.00	-
Janitorial	1,600.00	1,600.00	-
Budgeted costs	107,860.00	107,836.00	24.00	Favorable

3)

Manufacturing overhead responsible report
Controllable Costs	124000 Budgeted Units	124000 Actual Units	Variance	Remarks
Indirect material	6,200.00	6,186.00	14.00	Favorable
Indirect labour	14,880.00	14,857.00	23.00	Favorable
Utilities	12,400.00	12,433.00	-      33.00	Unfavorable
Maintainence	8,680.00	8,660.00	20.00	Favorable
Total variance costs	42,160.00	42,136.00	24.00	Favorable