Chapter 10, Problem 10.1DI

Wade Company estimates that it will produce 6,000 units of product 10A dur­ing the current month. Budgeted variable manufacturing costs per unit are direct materials $7, direct labor $13, and overhead $18. Monthly budgeted fixed manufacturing overhead costs are $8,000 for depreciation and $3,800 for supervision.

In the current month, Wade actually produced 6,500 units and incurred the following costs: direct materials $38,850. direct labor $76,440. variable overhead $116,640, depreci­ation $8,000, and supervision $4,000.

Prepare a static budget report. Hint: The Budget column is based on estimated produc­tion while the Actual column is the actual cost incurred during the period. (Note: You do not need to prepare the heading.) Were costs controlled? Discuss limitations of the budget.