Question

Gundy Company expects to produce 1,316,400 units of Product XX in 2017. Monthly production is expected to range from 74,600 to 122,000 units. Budgeted variable manufacturing costs per unit are: direct materials $5, direct labor $6, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $4 and for supervision are $2.

In March 2017, the company incurs the following costs in producing 98,300 units: direct materials $511,500, direct labor $588,800, and variable overhead $989,000. Actual fixed costs were equal to budgeted fixed costs.

Prepare a flexible budget report for March. (List variable costs before fixed costs.)

GUNDY COMPANY Manufacturing Flexible Budget Report For the Month Ended March 31, 2017
					Difference
	Budget		Actual		Favorable Unfavorable Neither Favorable nor Unfavorable

Answer 1

• All working forms part of the answer
• Working

	Cost per expected units	Expected yearly units	Total Annual Overheads	Monthly Fixed Cost
	[A = given]	[B = given]	[C = A x B]	[D = C /12 months]
Depreciation	$                         4.00	1,316,400	$   5,265,600.00	$      438,800.00
Supervision	$                         2.00	1,316,400	$   2,632,800.00	$      219,400.00

• Requirement

GUNDY COMPANY
Manufacturing Flexible Budget Report
For the Month Ended March 31, 2017
	Budget	Actual	Difference
Variable Costs:
Direct Materials	$          491,500.00	511500	$           20,000.00	Unfavourable
Direct Labor	$          589,800.00	588800	$             1,000.00	Favourable
Overhead	$          983,000.00	989000	$             6,000.00	Unfavourable
Total variable Cost	$      2,064,300.00	$     2,089,300.00	$           25,000.00	Unfavourable
Fixed Costs:
Fixed manufacturing overhead - Depreciation	$          438,800.00	$        438,800.00	$                          -	Neither Favorable nor Unfavourable
Fixed manufacturing overhead - Supervision	$          219,400.00	$        219,400.00	$                          -	Neither Favorable nor Unfavourable
Total Fixed Cost	$          658,200.00	$        658,200.00	$                          -	Neither Favorable nor Unfavourable
Total Cost	$      2,722,500.00	$     2,747,500.00	$           25,000.00	Unfavourable

--Working

GUNDY COMPANY
Manufacturing Flexible Budget Report
For the Month Ended March 31, 2017
	Budget	Actual	Difference
Variable Costs:
Direct Materials	=98300 units x $5	511500
Direct Labor	=98300 units x $6	588800
Overhead	=98300 units x $10	989000
Total variable Cost	Total variable Cost	Total variable Cost
Fixed Costs:
Fixed manufacturing overhead - Depreciation	$      438,800.00	$      438,800.00
Fixed manufacturing overhead - Supervision	$      219,400.00	$      219,400.00