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. $30,000 40,350 66,000 136,350 Variable costs Indirect materials Manufacturing supplies Maintenance and utilities Total variable MOH: Fixed costs Supervision Insurance Depreciation Total fixed MOH: Total These are ANNUAL amounts 80,000 14,400 109,800 204,200 $340,55 0 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 Il labor 39,060 These are quarterly Indirect materials 11,200 Manufacturing supplies 14,150 amounts Maintenance and 22,500 utilities Supervision 25,000 Insurance 3,600 Depreciation 27,450 Total $440,30 0 Sundazzler Inc. Manufacturing Flexible Budget Report For the Quarter Ended March 31, 2022 Budget for 1,050 pergolas Actual costs for 1,050 pergolas Difference For U? Units to be produced Costs: Variable costs Lumber Metal kits Labor---type Labor-type II Indirect materials Manufacturing supplies Maintenance and utilities Total variable costs Fixed cost Supervision Insurance Depreciation Total fixed costs Total costs 1. Prepare the annual manufacturing budget for 2022, assuming that 3,000 pergolas will be produced. Use the Excel template provided in the other attached file. 2. 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. See sheet 2 on the Excel template). 3. Assuming that the pergola line is treated as a cost center, prepare a flexible budget report for manufacturing for the quarter ended March 31, 2022, when 1,050 units were produced. (Round all budgeted amounts to the nearest dollar.) 4. Prepare a brief report about how well management contained costs for the quarter. 5. The accounting manager reviewed the cost reports and noted the following actual costs for a particular order that consisted of 20 pergolas: *1,200 pounds of lumber were purchased at a total cost of $2,040. *Twenty (20) metal kits were assembled at a total cost of $3,240. *Type I employees worked 38 hours on this project at a total cost of $570. *Type II finishing employees worked 65 hours at a total cost of $796.25
