Question

Gundy Company expects to produce 1,260,000 units of Product XX in 2017. Monthly production is expected to range from 85,600 to 124,800 units. Budgeted variable manufacturing costs per unit are direct materials $4, direct labor $7, and overhead $10. Budgeted fixed manufacturing costs per unit for depreciation are $6 and for supervision are $2.

Prepare a flexible manufacturing budget for the relevant range value using 19,600 unit increments. (List variable costs before fixed costs.)

Answer 1

Prepare a flexible manufacturing budget for the relevant range value using 19,600 unit increments. (List variable costs before fixed costs.)

Number of units	85600	105200	124800
Variable cost
Direct material	342400	420800	499200
Direct labour	599200	736400	873600
Overhead	856000	1052000	1248000
Total variabel cost	1797600	2209200	2620800
Fixed cost
Depreciation	630000	630000	630000
Supervision (1260000*2/12)	210000	210000	210000
Total fixed cost	840000	840000	840000
Total manufacturing cost	2637600	3049200	3460800