Question

Wade Company estimates that it will produce 6,900 units of product IOA during the current month. Budgeted variable manufacturing costs per unit are direct materials $7, direct labor $13, and overhead $17. Monthly budgeted fixed manufacturing overhead costs are $7,600 for depreciation and $3,700 for supervision. In the current month, Wade actually produced 7,400 units and incurred the following costs: direct materials $45,300, direct labor $88,600, variable overhead $125,900, depreciation $7,600, and supervision $3,990. 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.

Answer 1

Answer)Preparation of static budget

Particulars	unit costs($)	static budget($) [6900 units] (1)	Actual Amount($) [7400 units] (2)	Variances [500 units favourable] [(1)-(2)]
Direct materials(a)	7	48300 [6900 units×$7]	45300	3000 favourable
Direct labour (b)	13	89700 [6900units ×$13]	88600	1100 favourable
Variable Overhead (c)	17	117300 [6900 units×$17]	125900	8600 unfavorable
Total variable overhead [(a)+(b)+(c)](X)		255300	259800	4500 adverse
Depreciation(d)		7600	7600	0
Supervision(e)		3700	3990	290 unfavorable
Total fixed Overhead [(d)+(e)](y)		11300	11590	290 unfavorable
Total overhead[(x)+(y)]		266600	271390	4790 unfavorable