Explore BrainMass

Flexible budget

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours.

Instructions : Prepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours.

Data concerning manufacturing overhead for Firuliru Company are presented below.
The Mixing Department is a cost center.

An analysis of the overhead costs reveals that all variable costs are controllable by the manager of the Mixing Department and that 50% of supervisory costs are controllable at the department level.

The flexible budget formula and the cost and activity for the months of July and August are as follows:

Flexible Budget Per
Direct Labor Hour Actual Costs and Activity
July August
Direct labor hours 6,000 7,000
Overhead costs
Indirect materials $3.50 $ 20,500 $ 25,100
Indirect labor 6.00 39,500 40,700
Factory supplies 1.00 7,600 8,200

Depreciation $20,000 15,000 15,000
Supervision 25,000 23,000 26,000
Property taxes 10,000 12,000 12,000
Total costs $117,600 $127,000
a) Prepare the responsibility reports for the Mixing Department for each month.
b) Comment on the manager's performance in controlling costs during the two month period.

© BrainMass Inc. brainmass.com October 25, 2018, 3:54 am ad1c9bdddf

Solution Summary

The solution explians how to prepare a flexible budget for different activity levels

See Also This Related BrainMass Solution

Explain a flexible budget. How is a flexible budget related to a static budget?

Explain a flexible budget. How is a flexible budget related to a static budget?

What is responsibility accounting? Explain the purpose of responsibility accounting.

What do you believe the future holds for the Sarbanes-Oxley Act? Explain

What is the objective of internal auditing? Is the scope of internal auditing limited to financial statement audits? Explain.

Do you believe the Securities Acts of 1933 and 1934 were necessary? Explain.

View Full Posting Details