Novak Company expects to produce 1,560,000 units of Product XX in 2022. Monthly production is expected to range from 104,000 to 156,000 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. In March 2022, the company incurs the following costs in producing 130,000 units: direct materials $676,000, direct labor $774,800, and variable overhead $1,046,500. Actual fixed costs were equal to budgeted fixed costs. Prepare a flexible budget report for March. (List variable costs before fixed costs.)
Novak Company expects to produce 1,560,000 units of Product XX in 2022. Monthly production is expected to range from 104,000 to 156,000 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead $8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1. In March 2022, the company incurs the following costs in producing 130,000 units: direct materials $676,000, direct labor $774,800, and variable overhead $1,046,500. Actual fixed costs were equal to budgeted fixed costs. Prepare a flexible budget report for March. (List variable costs before fixed costs.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:$
$
$
Budget
I
$
NOVAK COMPANY
Manufacturing Flexible Budget Report
For the Month Ended March 31, 2022
Actual
Difference
Favorable
Unfavorable
Neither Favora
nor Unfavoral
E
Transcribed Image Text:Novak Company expects to produce 1,560,000 units of Product XX in 2022. Monthly production is expected to range
from 104,000 to 156,000 units. Budgeted variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead
$8. Budgeted fixed manufacturing costs per unit for depreciation are $2 and for supervision are $1.
In March 2022, the company incurs the following costs in producing 130,000 units: direct materials $676,000, direct labor $774,800,
and variable overhead $1,046,500. Actual fixed costs were equal to budgeted fixed costs.
Prepare a flexible budget report for March. (List variable costs before fixed costs.)
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