Prepare budget report for august using flexible budget data

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Hill Company uses budgets in controlling costs. The August 2014 budget report for the company's Assembling Department is as follows.


HILL COMPANY
Budget Report
Assembling Department
For the Month Ended August 31, 2014

Manufacturing Costs

Budget

Actual

Difference

Favorable (F)
Unfavorable (U)

Variable costs





Direct materials

$54,000

$53,000

$1,000

F

Direct labor

55,800

52,710

3,090

F

Indirect materials

28,800

28,940

140

U

Indirect labor

19,800

19,330

470

F

Utilities

18,000

17,810

190

F

Maintenance

13,800

14,160

360

U

Total variable

190,200

185,950

4,250

F

Fixed costs





Rent

10,860

10,860

-0-


Supervision

18,100

18,100

-0-


Depreciation

7,520

7,520

-0-


Total fixed

36,480

36,480

-0-


Total costs

$226,680

$222,430

$4,250

F

The monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 58,000 units were produced.

State the total monthly budgeted cost formula.

Prepare a budget report for August using flexible budget data.

In September, 64,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August.

Reference no: EM131096184

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