Phoenix, Inc., plans to produce 10,000 motors each month. Time and motion studies reveal it takes five machine-hours per motor. The established monthly manufacturing overhead budget iS:

Required:

a. What is the cost estimating formula for each fixed and variable cost? Express the total cost estimating formula on the basis of machine-hours.

b. Prepare a budget for the actual production level and determine variances from budget for each detailed expense.

c. List some factors that could cause the variances you determined in Requirement b.

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Maintenance and repairs. Utilities Factory supplies $130,000 157,500 67,500 Rent..... Insurance 30,000 18,000 $403,000 Maintenance and repairs, utilities, and factory supplies vary directly with production. Assume a rental contract with a specified monthly payment and monthly insurance payments. At the end of the month, the accountant determined that workers made 9,120 motors in 45,600 actual machine-hours. Actual manufacturing costs were: Maintenance and repairs. Utilities Factory supplies Rent.... Insurance $118,000 144,100 63,400 32,000 16,500 $374,000