Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December:
Data used in budgeting:
Fixed Element per Month | Variable element per unit | ||||
Revenue | - | $ | 30.00 | ||
Direct labor | $ | 0 | $ | 3.50 | |
Direct materials | 0 | 10.40 | |||
Manufacturing overhead | 33,300 | 1.50 | |||
Selling and administrative expenses | 25,000 | 0.50 | |||
Total expenses | $ | 58,300 | $ | 15.90 | |
Actual results for December:
Revenue | $ | 156,340 |
Direct labor | $ | 17,980 |
Direct materials | $ | 56,566 |
Manufacturing overhead | $ | 41,040 |
Selling and administrative expenses | $ | 28,870 |
The manufacturing overhead in the flexible budget for December would be closest to:
A: $41,350
B:$40,733
C:$41,250
D:$41,310
Correct Option D i.e. $41,310 | ||
Flexible Budget | ||
Actual Level of Activity | 5,340 | |
Manufacturing overhead | ||
Fixed Portion | 33,300 | |
Add: Variable Portion | 8,010 | (5340*1.5) |
Total ,anufacturing overhead for flexible budget | 41,310 | |
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