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Milo Clothing Company produces mens ties since 1995. In order to reasonably plan and closely control their manufacturing costs, they use the budgeting system. The

Milo Clothing Company produces mens ties since 1995. In order to reasonably plan and closely control their manufacturing costs, they use the budgeting system. The following budgeted and actual amounts are released to top management for 2020 and they asked you, a cost accountant, to prepare a performance budget report so that they can analyze all type of variances including both favourable and unfavourable.

Cost

Budget at 4,000 Units

Actual Amounts at 4,500 Units

Direct materials

$185,000

$188,000

Direct labour

226,000

250,000

Equipment depreciation

6,000

6,000

Indirect labour

22,000

25,000

Indirect materials

14,000

16,000

Rent and insurance

35,000

35,000

Prepare a flexible budget report for Milo Clothing Company for the year and then answer the following question:

What is the Flexible Budget for Indirect Labour?

Select one:

a. $44,120

b. $24,750

c. $12,230

d. $34,335

Clear my choice

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