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# Hannon Company: Prepare a flexible manufacturing budget

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BE21-4

See the attached file for proper format of the table.

Hannon Company expects to produce 1,200,000 units of Product XX in 2010. Monthly production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing costs per unit are: direct materials \$4, direct labor \$6, and overhead \$8. Budgeted fixed manufacturing costs per unit for depreciation are \$2 and for supervision are \$1. Complete the flexible manufacturing budget for the relevant range value using 20,000 unit increments.

HANNON COMPANY
Monthly Flexible Manufacturing Budget
For the Year 2010
Activity level

Finished goods
Variable costs
Direct materials \$
\$
\$

Direct labor

Total variable costs \$
\$
\$

Fixed costs
Depreciation

Supervision

Total fixed costs

Total costs \$
\$
\$

#### Solution Preview

Your tutorial is shown in Excel (attached, click in cells to see computations). The trick is to solve for ...

#### Solution Summary

Your tutorial is shown in Excel (attached, click in cells to see computations). The trick is to solve for the monthly fixed costs. The per unit is based on the annual activity. So, you multiply the per unit times the annual units to get the total and then adjust it to monthly.

I have shown the three levels of activity requested.

\$2.19