Managerial Accounting Project - Summer 2021

Sundazzler Designs has prepared the annual manufacturing budget for its line of specialty pergolas. It estimated annual production of 3,000 pergolas during 2022. Each pergola will require 54 pounds of lumber and a metal kit (attachments and decorative embellishments.). The lumber used in these pergolas costs $1.50 per pound, and the metal kits cost $170 each. Each pergola will use two kinds of labor2 hours of type I labor from people who run the cutting saws and finishing tools, and 3 hours of work from type II workers who attach the metal reinforcements and other hardware. The type I employees are paid $15 per hour, and the type II are paid $12 per hour.

Manufacturing overhead is budgeted at $340,550 for the year 2022, broken down as follows.

Variable costs
Indirect materials	$30,000
Manufacturing supplies	40,350
Maintenance and utilities	66,000
Total variable MOH:	136,350
Fixed costs
Supervision	80,000
Insurance	14,400
Depreciation	109,800
Total fixed MOH:	204,200
Total	$340,550

Annual amounts

During the first quarter, ended March 31, 2022, 1,050 units were actually produced with the following costs.

Lumber	$87,000
Metal kits	178,840
Type I labor	31,500
Type II labor	39,060
Indirect materials	11,200
Manufacturing supplies	14,150
Maintenance and utilities	22,500
Supervision	25,000
Insurance	3,600
Depreciation	27,450
Total	$440,300

quarterly amounts

Peak sales occur during the summer months, so management expects production to be highest in the first quarter of the year. Prepare the flexible budget for manufacturing for the quarter ended March 31, 2022, assuming that production is a) 950 units, b) 1,050 units and c) 1,200 units. (Note: You have to prepare a separate budget for each level of activity.