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5. Capstone, Inc. (Chapter 9) Capstone, Inc. is continuing its budget preparations and had the following...

5. Capstone, Inc. (Chapter 9)

Capstone, Inc. is continuing its budget preparations and had the following static budget and overhead costs for March 2020.

CAPSTONE, INC.

Manufacturing Overhead Budget (Static)

For the Month of March 2020

Budgeted production in units     117,500

Budgeted costs

Indirect materials                      $ 5,875

Indirect labor                              14,100

Utilities                                       11,750

Maintenance                                 8,225

Salaries                                       45,000

Depreciation                               16,800

Property taxes                              3,000

Insurance                                      1,200

Janitorial                                       1,500

Total budgeted costs                           $107,450

CAPSTONE, INC.

Manufacturing Overhead Costs (Actual)

For the Month of March 2020

Production in units                             118,500

Costs

Indirect materials                     $ 5,910

Indirect labor                             14,195

Utilities                                      11,880

Maintenance                                8,275

Salaries                                      45,000

Depreciation                              16,800

Property taxes                          3,000

Insurance                                     1,200

Janitorial                                      1,500

Total costs                                          $107,760

Capstone, Inc. produced 118,500 units in March rather than the budgeted number of units.

Instructions

  1. Prepare a flexible overhead budget based on the following amounts produced.
    1. 115,500 units
    2. 116,500 units
    3. 117,500 units
    4. 118,500 units
    5. 119,500 units
  1. Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March.

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

Solutions

Expert Solution

First we will calculate overhaed rate
Variable Rate
Indirect materials       I       5875/117500 $0.05
Indirect labor            L   14100/117500 0.12
Utilities                    U              11750/117500 0.1
Maintenance           M                8225/117500 0.07
ans 1 Flexible Overhead Budget
For the month ended March
Budgeted production B 115500 116500 117500 118500 119500
Budgetd cost in $
Indirect materials       I *B 5775 5825 5875 5925 5975
Indirect labor            L *B 13860 13980 14100 14220 14340
Utilities                    U *B            11550 11650 11750 11850 11950
Maintenance           M*B                8085 8155 8225 8295 8365
Salaries                                      45000 45000 45000 45000 45000
Depreciation                         16800 16800 16800 16800 16800
Property taxes                          3000 3000 3000 3000 3000
Insurance                                1200 1200 1200 1200 1200
Janitorial 1500 1500 1500 1500 1500
Total budgeted cost 106770 107110 107450 107790 108130
ans 2
Flexible Budget Report
For the month ended March Budget Actual Variance
Production 118500 118500
Indirect materials       I *B 5925 5910 15 Unfavorable
Indirect labor            L *B 14220 14195 25 Unfavorable
Utilities                    U *B            11850 11880 30 Favorable
Maintenance           M*B                8295 8275 20 Unfavorable
Total variable cost V 40290 40260 30 Unfavorable
Fixed cost
Salaries                                      45000 45000 0 None
Depreciation                         16800 16800 0 None
Property taxes                          3000 3000 0 None
Insurance                                1200 1200 0 None
Janitorial 1500 1500 0 None
Total Fixed cost F 67500 67500 0 None
Total Manufacturing overhead V+F 107790 107760 30 Unfavorable
ans 3
Performace report
Manufacturing overhead
For the month ended March
Budget Actual
Indirect materials       I *B 5925 5910 15 Unfavorable
Indirect labor            L *B 14220 14195 25 Unfavorable
Utilities                    U *B            11850 11880 30 Favorable
Maintenance           M*B                8295 8275 20 Unfavorable
40290 40260 30 Unfavorable
If any d oubt please comment

ekkarill92 answered 1 year ago
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