Question
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
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.
Annual amounts 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 |
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 |
Question:
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
Costs: |
Variable costs |
Lumber |
Metal kits |
Labortype I |
Labortype II |
Indirect materials |
Manufacturing supplies |
Maintenance and utilities |
Total variable costs |
Fixed costs |
Supervision |
Insurance |
Depreciation |
Total fixed costs |
Total costs |
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