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Question 1 Wade Company estimates that it will produce 6,500 units of product IOA during the...

Question 1

Wade Company estimates that it will produce 6,500 units of product IOA during the current month. Budgeted variable manufacturing costs per unit are direct materials $6, direct labor $13, and overhead $17. Monthly budgeted fixed manufacturing overhead costs are $7,800 for depreciation and $3,700 for supervision.

In the current month, Wade actually produced 7,000 units and incurred the following costs: direct materials $36,000, direct labor $83,500, variable overhead $118,500, depreciation $7,800, and supervision $3,970.

Prepare a static budget report. Hint: The Budget column is based on estimated production while the Actual column is the actual cost incurred during the period. (List variable costs before fixed costs.)

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Answer #1
Static budget report Static budget Actual Difference
Variable overheads
Direct material 39000 36000 3000 Favorable
Direct labor 84500 83500 1000 Favorable
Overheads 110500 118500 8000 Unfavorable
Total variable overheads 234000 238000 4000 Unfavorable
Fixed overheads
Depreciation 7800 7800 0 Neoither
Supervision 3700 3970 270 Unfavorable
Total fixed overheads 11500 11770 270 Unfavorable
Total cost 245500 249770 4270 Unfavorable
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