Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year. The company prepared the following budget on May 1:     Budgeted (50,000 units)   Variable costs:       Direct materials used $ 36,000   Direct labor   45,000   Variable overhead   22,500   Fixed costs:       Manufacturing overhead   58,500   Total manufacturing costs $ 162,000   -               During the first quarter, Skelton produced 60,000 units and incurred total manufacturing costs of $184,000. For the 2 questions, below, asked, show your calculations to help explain your choice. a.  Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?  Explain the reasoning behind your choice A) Direct materials used, $43,200 B) Direct labor, $54,000 C) Variable overhead, $27,000 D) Fixed manufacturing overhead, $70,200   b.  A performance report for Skelton's first quarter of operations using a flexible budget approach would show: A) Actual costs over budget by $1,300. B) Actual costs over budget by $11,700. C) Actual costs over budget by $15,150. D) Total costs per the flexible budget of $194,400.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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5.  Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year. The company prepared the following budget on May 1:

 

 

Budgeted

(50,000 units)

 

Variable costs:

 

 

 

Direct materials used

$

36,000

 

Direct labor

 

45,000

 

Variable overhead

 

22,500

 

Fixed costs:

 

 

 

Manufacturing overhead

 

58,500

 

Total manufacturing costs

$

162,000

 

-

 

         

 

During the first quarter, Skelton produced 60,000 units and incurred total manufacturing costs of $184,000.

For the 2 questions, below, asked, show your calculations to help explain your choice.

a.  Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level?  Explain the reasoning behind your choice

A) Direct materials used, $43,200

B) Direct labor, $54,000

C) Variable overhead, $27,000

D) Fixed manufacturing overhead, $70,200

 

b.  A performance report for Skelton's first quarter of operations using a flexible budget approach would show:

A) Actual costs over budget by $1,300.

B) Actual costs over budget by $11,700.

C) Actual costs over budget by $15,150.

D) Total costs per the flexible budget of $194,400.

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