Question - Widgets Express assembles widgets and uses flexible budgeting and a standard cost system. Overhead is allocated based on the number of direct materials parts. The performance report for Widgets Express includes the following information:
|
|
Master
Budget
|
Actual
Results
|
|
Sales
|
|
|
|
Budget: 10,000 widgets x $200
|
$2,000,000
|
|
|
Actual: 12,000 widgets x $220
|
|
$2,640,000
|
|
Variable manufacturing expenses:
|
|
|
|
Direct materials
|
|
|
|
Budget: 100,000 parts x $5.00
|
500,000
|
|
|
Actual: 120,000 parts x $4.50
|
|
540,000
|
|
Direct labor
|
|
|
|
Budget: 20,000 hrs x $12.00
|
240,000
|
|
|
Actual: 22,500 hrs x $12.50
|
|
281,250
|
|
Variable overhead
|
|
|
|
Budget: 100,000 parts x $2.00
|
200,000
|
|
|
Actual: 120,000 parts x $2.20
|
|
264,000
|
|
Fixed manufacturing expenses:
|
|
|
|
Fixed overhead
|
85,000
|
100,000
|
|
Total cost of goods sold
|
1,025,000
|
1,185,250
|
|
Gross profit
|
$975,000
|
$1,454,750
|
Prepare a flexible budget based on the actual number of widgets sold.