Bramble Company uses budgets in controlling costs. The August 2020 budget report for the company’s Assembling Department is as follows. BRAMBLE COMPANY Budget Report Assembling Department For the Month Ended August 31, 2020 Difference Manufacturing Costs Budget Actual Favorable Unfavorable Neither Favorable nor Unfavorable Variable costs Direct materials $51,240 $50,240 $1,000 Favorable Direct labor 59,780 56,680 3,100 Favorable Indirect materials 25,620 25,920 300 Unfavorable Indirect labor 19,520 19,090 430 Favorable Utilities 15,250 15,080 170 Favorable Maintenance 12,200 12,400 200 Unfavorable Total variable 183,610 179,410 4,200 Favorable Fixed costs Rent 11,800 11,800 –0– Neither Favorable nor Unfavorable Supervision 19,000 19,000 –0– Neither Favorable nor Unfavorable Depreciation 7,500 7,500 –0– Neither Favorable nor Unfavorable Total fixed 38,300 38,300 –0– Neither Favorable nor Unfavorable Total costs $221,910 $217,710 $4,200 Favorable The monthly budget amounts in the report were based on an expected production of 61,000 units per month or 732,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 59,000 units were produced.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bramble Company uses budgets in controlling costs. The August 2020 budget report for the company’s Assembling Department is as follows.

BRAMBLE COMPANY Budget Report Assembling Department For the Month Ended August 31, 2020
			Difference
Manufacturing Costs	Budget	Actual	Favorable Unfavorable Neither Favorable nor Unfavorable
Variable costs
Direct materials	$51,240	$50,240	$1,000	Favorable
Direct labor	59,780	56,680	3,100	Favorable
Indirect materials	25,620	25,920	300	Unfavorable
Indirect labor	19,520	19,090	430	Favorable
Utilities	15,250	15,080	170	Favorable
Maintenance	12,200	12,400	200	Unfavorable
Total variable	183,610	179,410	4,200	Favorable
Fixed costs
Rent	11,800	11,800	–0–	Neither Favorable nor Unfavorable
Supervision	19,000	19,000	–0–	Neither Favorable nor Unfavorable
Depreciation	7,500	7,500	–0–	Neither Favorable nor Unfavorable
Total fixed	38,300	38,300	–0–	Neither Favorable nor Unfavorable
Total costs	$221,910	$217,710	$4,200	Favorable

The monthly budget amounts in the report were based on an expected production of 61,000 units per month or 732,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 59,000 units were produced.

(b) Prepare a budget report for August using flexible budget data. (List variable costs before fixed costs.)
BRAMBLE COMPANY
Assembling Department
Flexible Budget Report
For the Month Ended August 31, 2020
Difference
Favorable
Unfavorable
Neither Favorable
Budget
Actual Costs
nor Unfavorable
59000
59000
51.240
48,592.79
2,647
Favorable
59,780
54,821.64
4,958
Favorable
25,620
25,070.16
550
Favorable
19,520
18,464.10
1,056
Favorable
15,250
14,585.57
664
Favorable
12,200
11,993.44
207
Favorable
183,610
173,527.70
10,082
Favorable
11,800
11,800
Neither Favorable nc
19,000
i
19,000
i
Neither Favorable nc
7,500
7,500
Neither Favorable nc
38,300
38,300
Neither Favorable nc
%24

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