Reference no: EM132717208
Question - Ye-star, Inc, Men to produce 10,000 Motors each month. Time and motion studies reveal it takes 5 machine hours per motor. The established monthly manufacturing overhead budget is:
maintenance and repairs 130,000
utilities 157,000
factory supplies 67,500
rent 30,000
insurance 18,000
Maintenance and repairs, utilities, and factory supplies vary directly with production. as you are rental contract with a specified monthly payment and insurance is paid monthly. at the end of the month, it was determined that 45,600 actual machine hours were incurred in making 9120 Motors and actual manufacturing costs were:
Maintenance and repairs 118,000
Utilities 144,100
Factory supplies 63,400
Rent 32,000
Insurance 16,500
Note: The relevant production level ranges from 10,000 to 15,000.
Required -
a. What is the flexible budget formula for the fixed and variable cost behavior? Express the formula in machine hours.
b. Make a flexible budget for the actual production level.