Problem: A company makes a product out of metal. They use two pounds of metal that costs them $20 per pound. They pay their employees $25 an hour and it takes an average of 1.3 hours for them to make the final product. They expect to sell 8,000 units. They also expect to incur $40,000 in fixed costs. Prepare the mastic static budget.
If they expect to sell 1,000 units in jan, 800 in feb. 900 in mar, 500 in april, 600 in may, 700 in jun, 400 in july and they have a policy of producing 20% in advance and buying 10% of the materials in advance. How much metal should they buy in march?
During the year the company sold 10,000 units for $760,000. They also paid $487500 for 25,000 pounds of metal. They also paid their employees $337,500 for 12,500 hours of work. In addition they paid $41,000 in fixed costs. Prepare the flexible budget and prepare a variance analysis.