1. Ina Machine Company’s flexible budget is given below:
INA MACHINE COMPANY
Flexible Budget
|
Conversion |
Cost Volume |
Number of Units |
||||
|
Cost |
Formula |
5,000 |
6,000 |
7,000 |
||
|
Direct labor |
$7.00 |
$35,000 |
$42,000 |
$49,000 |
||
|
Variable overhead costs: |
||||||
|
Supplies |
0.90 |
4,500 |
5,400 |
6,300 |
||
|
Utilities |
0.15 |
750 |
900 |
1,050 |
||
|
Maintenance |
1.25 |
6,250 |
7,500 |
8,750 |
||
|
Total |
$9.30 |
$46,500 |
$55,800 |
$65,100 |
||
The production budgeted for September was 6,000 units. During the month, the company
produced 6,200 units. The conversion costs incurred were:
|
Direct labor |
$44,300 |
|
Supplies |
6,120 |
|
Utilities |
965 |
|
Maintenance |
7,920 |