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StormLrd StormLrd
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6 years ago
Brown Dental Equipment uses a flexible budget for its indirect manufacturing costs. For 2016 the company anticipated that it would produce 36,000 components with 7,000 machine hours and 14,400 employee days. The costs and cost drivers were to be as follows:

    Fixed     Variable     Cost driver
Product handling   $30,000   $0.20   per unit
Inspection   8,000   4.00   per 100 unit batch
Utilities   400   2.00   per 100 unit batch
Maintenance   1,000   0.10   per machine hour
Supplies      2.50   per employee day

During the year the company processed 40,000 units, worked 15,000 employee days, and had 8,000 machine hours. The actual costs for 2016 were:

   Actual costs
Product handling   $38,400
Inspection    10,000
Utilities   1,420
Maintenance   1,400
Supplies   36,800

Required:
a.   Prepare an overhead static budget for 2016 with variances.
b.   Prepare an overhead flexible budget for 2016 with variances.
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
Authors:
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AllopaAllopa
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6 years ago
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