Reference no: EM132566189
Question - Limo Company uses budgets in controlling costs. The March 2020 budget report for the company's Assembling Department is as follows:
Limo Company Budget Report Assembling Department For the Month Ended March 31 2020
Manufacturing Overhead Budget Actual
Variable costs:
Indirect materials $48,000 46,000
Indirect labour 65,000 51,200
Utilities 15,000 15,600
Maintenance 12,000 12,500
Fixed Costs:
Rent 15,000 14,200
Supervision 18,000 19,300
Depreciation 5,000 5,200
The monthly budget amounts in the report were based on an expected production of 65,000 units per month or 780,000 units per year.
Given the actual expenses, the Assembling Department manager is pleased with the report and expects some praise for a job well done.
The company president, however, is unhappy with the results for March because only 55,000 units were produced.
Required -
(a) State the total monthly budgeted cost formula.
(b) Prepare Budget Report for March using flexible budget data.
(c) Which budget report provides a better basis for evaluating performance? Explain.