2004 Production

Budget production 10,000 bicycles		Actual production 10,800 Bicycles
Frame assembly: Steel tubing =3,300,000(110,000 lbs@ $30/) Paint = 25,000 (1250 gals@ $20/gal) labor =1,500,000 (100,000 @ $15/hr) Total = 4,825,000		Frame assembly: steel tubing=3,572,100(113,400 lbs@ $31.50/lb.) Paint = 28,187 (1,375 gals@ $ 20.50/gal) labor =1,528,050 (100,200 hrs @ $15.25/hr ) Total frame = 5,128,337
Wheel assembly: Parts = 1,200,000 (10,000 kits @$120/kit) Labor = 65,000 (5,000 hrs @ $13/hr ) Total = 1,265,000		Wheel assembly: Parts = $ 1,317,600 (10,800 kits @$122.00/kit) Rework Parts= 25,000 (spokes and rims) Labor = 74,250 (5,500 hrs @ $13.50/hr ) Total = 1,416,850
Final assembly: Parts =1,200,000 (10,000 @ $ 350/kits) Labor= 105,000 (7,500 hrs @ $14/hr) Total = 3,605,000		Final assembly: Parts =3,963,600 (10,800 @ $ 367/kits) Rework Parts = 45,000 (miscellaneous parts) Labor= 116,000 (8,000 hrs @ $14.50/hr) Total =4,124,600
Overhead Cost: Rent =250,000 Office Staff =100,000 Depreciation =100,000 Other costs =750,000 (estimated to be 2/3 variable) Total Overhead =1,200,000 Total Annual Costs = 10,895,000

Question #1 Prepare the Static Budget, Actual Budget and Flexible Budget for Mile High Cycles.

There are no sales prices, so just the costs are to be analyzed.

1. Assume that the ratio of fixed to variable overhead costs actually stayed the same as expected. So 1/3 fixed and 2/3 variable.
2. Assume that overhead is allocated on a per unit basis.