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Category > Accounting Posted 22 Jul 2017 My Price 11.00

production supervisor

The production supervisor of the Machining Department for Landers Company agreed to the following monthly static budget for the upcoming year:

Landers Company

Machining Department

Monthly Production Budget

Wages

$960,000

Utilities

300,000

Depreciation

60,000

Total

$1,320,000

The actual amount spent and the actual units produced in the first three months of 2008 in the Machining Department were as follows:

 

Amount Spent

Units Produced

January

$1,090,000

60,000

February

1,050,000

55,000

March

1,000,000

50,000

The Machining Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:

Wages per hour

$16.00

Utility cost per direct labor hour

$5.00

Direct labor hours per unit

0.80

Planned unit production

75,000

a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department.

b. Compare the flexible budget with the actual expenditures for the first three months. What does this comparison suggest?

Answers

Maurice Tutor
(5)
Status NEW Posted 22 Jul 2017 11:07 PM My Price 11.00

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