Rose Company uses a flexible budget for manufacturing overhead based on direct labor hours. The following information are from the yearly static overhead budget for the Production Department for 2023. It is based on 300,000 direct labor hours. Variable Costs Fixed Costs Indirect labor ($1.2 per DL hour) $30,000 Supervision $ 5,000 Supplies and lubricants ($0.5 per DL hour) 12,500 Depreciation 2,000 Maintenance ($0,7 per DL hour) 17,500 Property taxes 1,500 Utilities ($0,4 per DL hour) 10,000 Insurance 1,000 During July, 24,500 direct labor hours were worked. The company incurred the following variable costs in July: indirect labor $30,200, supplies and lubricants $11,600, maintenance $17,500, and utilities $9,200. Actual fixed overhead costs were the same as monthly budgeted fixed costs. a.) Prepare a flexible monthly budget for the Production Department for the relevant range between 24,000 and 26,000 DL hours with increments of 1000 DL hours. b.) Prepare a flexible budget report for the Production Department for July.
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.
Rose Company uses a flexible budget for manufacturing
Variable Costs Fixed Costs
Indirect labor ($1.2 per DL hour) $30,000 Supervision $ 5,000
Supplies and lubricants ($0.5 per DL hour) 12,500
Maintenance ($0,7 per DL hour) 17,500 Property taxes 1,500
Utilities ($0,4 per DL hour) 10,000 Insurance 1,000
During July, 24,500 direct labor hours were worked. The company incurred the following variable costs in July: indirect labor $30,200, supplies and lubricants $11,600, maintenance $17,500, and utilities $9,200. Actual fixed overhead costs were the same as monthly budgeted fixed costs.
a.) Prepare a flexible monthly budget for the Production Department for the relevant range between 24,000 and 26,000 DL hours with increments of 1000 DL hours.
b.) Prepare a flexible budget report for the Production Department for July.
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