Question

Grundy company expects to produce 1,200,00 units of product xx in 2017. Monthly production is expected...

Grundy company expects to produce 1,200,00 units of product xx in 2017. Monthly production is expected to range from 80,000 to 120,000 units. budgets variable manufacturing costs per unit are direct materials $5, direct labor $6, and overhead $8. budgeted fixed manufacturing cost per unit for depreciation are $2 and for supervision are $1. Prepare a flexible manufacturing budget for the relevant range value using 20,000 unit increments.

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Answer #1

Flexible Manufacturing budget for Grundy Company

Unit level 80,000 100,000 120,000
Direct material @5/unit 400,000 500,000 600,000
Direct labor @6/unit 480,000 600,000 720,000
Over head @8/unit 640,000 800,000 960,000
Total Variable Cost 15,20,000 19,00,000 22,80,000
Depreciation @2/unit 160,000 200,000 240,000
Supervision @1/unit 80,000 100,000 120,000
Total Fixed Cost 240,000 300,000 360,000
TOTAL COST 17,60,000 22,00,000 26,40,000
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