Prepare a flexible selling and administralive L $600,000, $800,000, and $1,000,0
ID: 2432328 • Letter: P
Question
Prepare a flexible selling and administralive L $600,000, $800,000, and $1,000,000. (Use Exhibit 5 as a model.) E13-2 Static budget vs. flexible budget The production supervisor of the Machining Department for Lei Company agreed to the following monthly static budget for the upcoming year: LEI COMPANY Machining Department Monthly Production Budget Wages Utilities Depreciation Total $1,440,000 92,000 32,500 $1,564,500 Vote: The spreadsheet icon indicates an Excel template is available on the student companion site.Explanation / Answer
b) The machining department is not performing to its potential and the production costs are more than the budgeted .
E13-2) Flexible Budget: Static Budget Flexible Budget Month Jan Feb Mar calculation Production 100000 75000 85000 90000 Wages 1440000 1080000 1224000 1296000 75000*0.8*18 Utilities 92000 69000 78200 82800 75000*0.8*1.15 Depreciation 32500 32500 32500 32500 fixed Total Budgeted Costs 1564500 1181500 1334700 1411300 Actual costs 1200000 1356000 1425000 direct hours per unit = 1440000 /18 * 100000 = 0.80 hour per unit