Perpare a flexible overhead budget based on the amounts proceeding.
117,500units & 118,500 units..
Static overhead Budgeted info 117,500 units, Indirect Materials $7,050, Indirect labor was $11,750, Utilities $10,575, Maintenance $5,875, The accounts with the same figures as actual were as follows: Salaries $42,000, Depriciation $16,800, Property taxes $2,500, Insurance $1,200, And janitorial $1,300.
The actual manufacturing overhead costs were Indirect materials $7,100, Indirect labor $11,825, tilities $10,700 And maintenance $5,900. The actual units were 118,500. How would I go about solving this flexible budget. I fill i need more info.
To prepare a flexible overhead budget, you need to calculate the estimated costs for various categories based on the actual number of units produced. Here's how you can approach it:
Step 1: Calculate the budgeted amounts for each cost category at the static 117,500 units:
Indirect Materials: $7,050
Indirect Labor: $11,750
Utilities: $10,575
Maintenance: $5,875
Salaries: $42,000 (same as actual)
Depreciation: $16,800 (same as actual)
Property Taxes: $2,500 (same as actual)
Insurance: $1,200 (same as actual)
Janitorial: $1,300 (same as actual)
Step 2: Calculate the variable overhead cost per unit for each cost category. To do this, divide the budgeted amounts by the number of units, which in this case is 117,500:
Variable Overhead Cost per Unit = Budgeted Amount / Number of Units
For example:
Indirect Materials per unit = $7,050 / 117,500
Indirect Labor per unit = $11,750 / 117,500
Utilities per unit = $10,575 / 117,500
Maintenance per unit = $5,875 / 117,500
Step 3: Now, apply the variable overhead costs per unit to the actual number of units (118,500 units) to calculate the flexible overhead budget at this level of activity:
Flexible Indirect Materials = Indirect Materials per unit * Actual Units
Flexible Indirect Labor = Indirect Labor per unit * Actual Units
Flexible Utilities = Utilities per unit * Actual Units
Flexible Maintenance = Maintenance per unit * Actual Units
Using the actual numbers provided:
Flexible Indirect Materials = Indirect Materials per unit * 118,500
Flexible Indirect Labor = Indirect Labor per unit * 118,500
Flexible Utilities = Utilities per unit * 118,500
Flexible Maintenance = Maintenance per unit * 118,500
Step 4: Calculate the total flexible overhead budget by summing up all the flexible costs:
Total Flexible Overhead Budget = Flexible Indirect Materials + Flexible Indirect Labor + Flexible Utilities + Flexible Maintenance
By following these steps, you should be able to calculate the flexible overhead budget based on the actual units (118,500) and the information provided.