Question
I am struggling with question 1d and 2c. I am not 100% sure if I am doing the budget cost formula correctly for 1d. For
I am struggling with question 1d and 2c. I am not 100% sure if I am doing the budget cost formula correctly for 1d. For 2c I'm struggling with the flexible budget formula also.
HammerTime is preparing their 2019 budget. They want to look at static budgets and flexible budgets to determine which is best for them. They estimate sales/production will be between 2,000,000 and 4,000,000 boxes of nails per month. They want to be able to understand their budget variances as well.
selling price per unit - 5.00 per unit
Raw materials costs - 1.50 per unit
packaging costs - .80 per unit
salary and wages costs - 300,000 per month
ot for production over 3,000,000 units
fringe benefits - 50% of wages and ot
electricity - .20 per unit
waste and other costs - .10 per unit
rent costs - 500,000 per month
insurance costs - 60,000 per month
depreciation costs - 240,000
Question 1:Prepare some budgets in Excel for HammerTime.
a)Show the static budget based on 3,000,000 units (boxes) produced.
b)Show the flexible budget based on 2,000,000 units (boxes) produced.
c)Show the flexible budget based on 4,000,000 units (boxes) produced.
d)Show the flexible budget cost formula(s) for HammerTime.
Info for Question 1 above
Info For Question 2: January actual
Production - 3,250,500 units
sales - 16,250,000
ingredient costs - 4,795,000
packaging costs - 2,600,000
salary and wages - 280,000
overtime - 195,500
fringe benefits - 237,750
electricity - 650,000
waste and other costs - 365,000
rent - 500,000
insurance - 65,000
depreciation costs - 240,000
Question 2:The month of January 2019 is complete, and HammerTime wants to compare their budget to their actual results.Actual results are shown in the table above.
a)Compare January's actual results to the static budget you created in Question 1.
b)Analyze the static budget variances. Be sure to break out price and volume variances and whether they are favorable or unfavorable for each line item. Provide possible explanations.
c)Create the flexible budget based on actual units produced for January.
d)Compare actual results to budgeted results for the flexible budget.
e)Analyze the flexible budget variances. Be sure to include the variance amount and whether the variance is favorable or unfavorable for each line item. Provide possible explanations.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started