Required: 1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.
Required: 1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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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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Transcribed Image Text:the company cure the mowing actuar costs when it operated at 75% of capacity in October.
writer
Direct materials (60,5ee pounds @ $5.20 per pound)
Direct labor (19,eee hours e $11.20 per hour)
Overhead costs
Indirect materials
Indirect labor
Power
Maintenance
Depreciation-Building
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total costs
Flexible Overhead Budgets
For Month Ended October 31 Variable Amount Total Fixed
per Unit
Cost
Required:
1. Prepare flexible overhead budgets for October showing amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity
levels.
Production (in units)
Variable overhead costs
Indirect materials
Indirect labor
Power
For Month Ended October 31 Variable Amount Total Fixed
per Unit
Cost
Maintenance
Taxes and insurance
Total variable overhead
Fixed overhead costs
Total overhead costs
ANTUAN COMPANY
▾
$
0.00
$ 41,400
176,300
17,250
34,500
24,000
97,200
15,300
196,000
$
$ 314,600
212,800
Flexible Budget at Capacity Level of
65%
75%
85%
601,950
$ 1,129,350
$
Flexible Budget at Capacity Level of
65%
75%
85%
0 $
0 $
0 $
0 $
0 $
0
0
Transcribed Image Text:Antuan Company set the following standard costs per unit for its product.
Direct materials (4.0 pounds @ $5.00 per pound)
Direct labor (1.6 hours @ $11.00 per hour)
Overhead (1.6 hours @ $18.50 per hour)
Standard cost per unit
The standard overhead rate ($18.50 per direct labor hour) is based on a predicted activity level of 75% of the factory's
capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75%
capacity level.
Overhead Budget (75% Capacity)
Variable overhead costs
Indirect materials
Indirect labor
Power
Maintenance
Total variable overhead costs
Fixed overhead costs
Depreciation-Building
Depreciation-Machinery
Taxes and insurance
Supervisory salaries
Total fixed overhead costs
Total overhead costs
$ 15,000
75,000
15,000
30,000
135,000
$ 20.00
17.60
29.60
$ 67.20
24,000
72,000
17,000
196,000
309,000
$ 444,000
The company incurred the following actual costs when it operated at 75% of capacity in October.
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