Business

Question

Gundy Company expects to produce 1,299,600 units of Product XX in 2017. Monthly production is expected to range from 73,600 to 118,800 units. Budgeted variable manufacturing costs per unit are direct materials $3, direct labor $6, and overhead $9. Budgeted fixed manufacturing costs per unit for depreciation are $6 and for supervision are $2.Prepare a flexible manufacturing budget for the relevant range value using 22,600 unit increments.

1 Answer

  •                         Monthly Flexible Manufacturing Budget

                                       For  the Year 2017

    Activity level

    Finished units                                           73,600     96,200        118,800

    Variable costs

    Direct materials($3)                              $220,800   $288,600  $356,400

    Direct labor($6)                                     $441,600    $577,200   $712,800

    Overhead($9)                                        $662,400   $865,800  $1,069,200

    Total variable costs                              $1,324,800 $1,731,600 $2,138,400

    Fixed cost

    Depreciation[($6 * 1,299,600) 12]        $649,800    $649,800    $649,800

    Supervision[($2 * 1,299,600) / 12]        $216,600    $216,600    $216,600

    Total fixed costs                                    $866,400   $866,400    $866,400

    Total costs                                            $2,191,200 $2,598,000 $3,004,800

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