WATERWAYS CORPORATION Manufacturing Overhead Budget (Static) For the Month of March Budgeted production in units 126,000 Budgeted costs Indirect materials $6,300 Indirect labor 16,380 Utilities 12,600 Maintenance 8,820 Salaries 44,800 Depreciation 17,100 Property taxes 3,100 Insurance 1,100 Janitorial 1,400 Total budgeted costs $111,600
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.
Waterways Corporation is continuing its budget preparations. Waterways had the following static budget and actual
| WATERWAYS CORPORATION Manufacturing Overhead Budget (Static) For the Month of March |
||
| Budgeted production in units | 126,000 | |
| Budgeted costs | ||
| Indirect materials | $6,300 | |
| Indirect labor | 16,380 | |
| Utilities | 12,600 | |
| Maintenance | 8,820 | |
| Salaries | 44,800 | |
| |
17,100 | |
| Property taxes | 3,100 | |
| Insurance | 1,100 | |
| Janitorial | 1,400 | |
| Total budgeted costs | $111,600 |
| WATERWAYS CORPORATION For the Month of March |
||
| Production in units | 127,000 | |
| Costs | ||
| Indirect materials | $6,336 | |
| Indirect labor | 16,484 | |
| Utilities | 12,730 | |
| Maintenance | 8,872 | |
| Salaries | 44,800 | |
| Depreciation | 17,100 | |
| Property taxes | 3,100 | |
| Insurance | 1,100 | |
| Janitorial | 1,400 | |
| Total costs | $111,922 |
Waterways produced 127,000 units in March rather than the budgeted number of units.
A)
Prepare a flexible overhead budget based on the following amounts produced. (Hint: Indirect materials, indirect labor, utilitites, and maintenance are variable costs. The other budgeted costs are fixed costs.) (Round unit costs to 2 decimal places, e.g. 2.25. List variable costs before fixed costs.)
| (1) | 124,000 units | |
| (2) | 125,000 units | |
| (3) | 126,000 units | |
| (4) | 127,000 units | |
| (5) | 128,000 units |
B)
Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March. (List vairble costs before fixed costs.)
C)
Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable.
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