Flexible Budget for Various Levels of Production Budgeted amounts for the year: Materials 2 leather strips @ $7.00 Labor 1.5 hr. @ $18.00 VOH 1.5 hr. @ $1.20 FOH $6,800 Required: 1. Prepare a flexible budget for 3,500, 4,000, and 4,500 units. Flexible Budget   Variable Costper Unit 3,500 units 4,000 units 4,500 units Direct materials $ $  $  $  Direct labor         Variable overhead         Fixed overhead         Total   $ $ $ 2. CONCEPTUAL CONNECTION Calculate the unit cost at 3,500, 4,000, and 4,500 units. (Note: Round unit costs to the nearest cent.) Unit cost at 3,500 units $ Unit cost at 4,000 units $ Unit cost at 4,500 units $ What happens to unit cost as the number of units produced increases? The cost per unit  as the number of units produced increases because fixed cost is spread over a greater number of units. Check My Work

XYZ Manufacturing production budget for April:                         40,000 units   Budgeted materials per unit:             Direct material “A”:                   2 gallons per unit @ $5.00 per gallon             Direct material “B”:                   6 lbs. per unit @ $8.00 per lb.   Budgeted materials inventory: April 1  Direct material “A”:                   5,000 gallons             Direct material “B”:                   8,000 lbs. April 30 Direct material “A”:                  6,000 gallons             Direct material “B”:                   8,000 lbs.   REQUIRED: Direct material “A” purchasing budget for the month of April in gallons and dollars:                                                                                                                                     DM “A” _____________gallons                                                                                                                                       DM “A” $__________________   Direct…

Static Budget versus Flexible Budget The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown CompanyMachining DepartmentMonthly Production Budget Wages $1,064,000 Utilities 56,000 Depreciation 92,000 Total $1,212,000 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:   Amount Spent Units Produced May $1,142,000   93,000   June 1,081,000   84,000   July 1,034,000   76,000   The Machining Department supervisor has been very pleased with this performance because actual expenditures for May–July have been significantly less than the monthly static budget of 1,212,000. However, the plant manager believes that the budget should not remain fixed for every month but should “flex” or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the…

Static budget variable overhead $7,500 Static budget fixed overhead $3,000 Static budget direct labor hours 1,500 hours Static budget number of units 7,500 units   Longman allocates manufacturing overhead to production based on standard direct labor hours. Last​ month, Longman reported the following actual​ results: actual variable​ overhead, $10,200​; actual fixed​ overhead, $2,820​; actual production of 6,900 units at 0.25 direct labor hours per unit. The standard direct labor time is 0.2 direct labor hours per unit ​(1,500 static direct labor hours​ / 7,500 static​ units). 1. Compute the overhead variances for the​ month: variable overhead cost​ variance, variable overhead efficiency​ variance, fixed overhead cost​ variance, and fixed overhead volume variance. 2. Explain why the variances are favorable or unfavorable.