In a 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
|