Reference no: EM132504779

Question - An Internet gourmet foods company, "Yumminess", will be including "Chocolate Attack Brownies" (CAB) in their online catalog. CAB will be sold in square tins and captioned with personal greetings. Jordan negotiated a selling price to Yumminess at $10 per tin.

You, using your accounting knowledge, had previously budgeted a cost of $8 per tin, which includes $6 of direct material and $1.50 of direct labor. Annual manufacturing overhead is estimated at $100,000 for the expected sales of 200,000 tins. Operating expenses are projected to be $80,000 annually.

After looking over the costs for manufacturing overhead and operating expenses, you approximate that 85% of manufacturing overhead and 20% of operating expenses are variable costs.

Jordan wants you to calculate a flexible manufacturing overhead budget assuming an annual level of 230,000 units instead of 200,000.

Required -

1. What would be total variable manufacturing overhead costs for this new level?

2. What would be total fixed manufacturing overhead costs for this new level?

3. Taylor asked if flexible budgets can be calculated every month. Create monthly manufacturing overhead flexible budget for 20,000 units. Please pass me the brownies!" What would be total variable manufacturing overhead costs for this new level?

4. Taylor asked to if flexible budgets can be calculated on a monthly basis. Create a monthly manufacturing overhead flexible budget for 20,000 units. Please pass me the brownies!" What would be total fixed manufacturing overhead costs for this new level?

5. Given an annual master budget of 200,000 units with the actual production of 210,000 units, you have been tasked to formulate a flexible budget report. What will be total manufacturing overhead costs at the budget level?