Reference no: EM133138840

Question - Maruti manufactures bots. In 2021, they planned to manufacture 10,000 bots using a standard of .5 direct-labor hours per gnome with a standard materials cost of $1.25 per gnome. Maruti currently leases manufacturing space for $15,000 per year. Each bot sells for $14.

The state passed an ordinance limiting the number of bots to no more than four per acre, which resulted in a decrease in demand for gnomes. Consequently, Maruti only produced and sold 8,500 bots in 2021. He used 4,000 direct-labor hours and materials cost $11,000. The actual average hourly rate of $6.40 during 2021 was $.25 higher than the standard wage rate of $6.15.

Required -

1. What is

a) the budgeted profit at the originally planned level of production, and

b) the budgeted profit at the achieved level of production?

2. What was the actual profit?