9. What variable manufacturing overhead cost would be included in the company's flexible budget for March? anufacturing overhead cost
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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ACUUNIFU ιιυπαινι
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Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct
labor-hours and its standard cost card per unit is as follows:
Direct material: 5 pounds at $8.00 per pound
Direct labor: 3 hours at $15 per hour
Variable overhead: 3 hours at $9 per hour
Total standard variable cost per unit
The company also established the following cost formulas for its selling expenses:
Variable
Cost per
Unit Sold
Advertising
Sales salaries and commissions
Shipping expenses
Fixed Cost
per Month
$ 350,000
$ 400,000
The planning budget for March was based on producing and selling 21,000 units. However, during March the company
actually produced and sold 26,000 units and incurred the following costs:
$ 40.00
45.00
27.00
$112.00
a. Purchased 160,000 pounds of raw materials at a cost of $6.50 per pound. All of this material was used in production.
b. Direct-laborers worked 70,000 hours at a rate of $16.00 per hour.
Variable manufacturing overhead cost
$ 27.00
$18.00
c. Total variable manufacturing overhead for the month was $655,200.
d. Total advertising, sales salaries and commissions, and shipping expenses were $358,000, $530,000, and $265,000,
respectively.
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9. What variable manufacturing overhead cost would be included in the company's flexible budget for March?
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