Reference no: EM13607942
Home Products Company manufactures a complete line of kitchen glass-ware. The Beverage Division specializes in 12-ounce drinking glasses. Erin Fisher, the superintendent of the Beverage Division, asked the controller to prepare a report of her division's performance in April. The following report was handed to her a few days later:
Cost Category (Variable Unit Cost) Budgeted Costs Actual Costs Difference Under (Over Budget
Direct materials ($.10) $ 5,000 $ 4.975 5 $25
Direct labor ($.12) 6,000 5,850 150
Variable overhead
Indirect labor ($.03) 1,500 1,290 210 Supplies ($.02) 1,000 960 40
Heat and power ($.03) 1.500 1,325 175 Other $.05) 2,500 2,340 160
Fixed overhead
Heat and power 3,500 3,500 - Depreciation 4,200 4,200 -
Insurance and taxes 1,200 1,200 -
Other 1,600 1,600 -
Totals $28,000 $27,240 $760
Required
- Prepare a flexible budget for the Beverage Division using production levels of 45.000 units. 50,000 units. and 55,000 units.
- What is the flexible budget formula?
- Assume that the Beverage Division produced 46,500 units in April and that all fixed costs remained constant. Prepare a revised report similar to the one above, using actual production in units as a basis for the budget column