ACC 206 Week 4 Chapter 7 Problem 1 Basic flexible budgeting http://www.seetutorials.com/products/acc-206week-4-chapter-7-problem-1-basic-flexiblebudgeting.html Chapter 7 Problem 1: Basic flexible budgeting Centron, Inc., has the following budgeted production costs:
$0.40 per unit
Direct labor 1.80 per unit Variable factory overhead Fixed factory overhead 2.20 per unit Supervision $24,000 Maintenance 18,000 Other 12,000
The company normally manufactures between 20,000 and 25,000 units each quarter. Should output exceed
25,000 units, maintenance and other fixed costs are expected to increase by $6,000 and $4,500, respectively. During the recent quarter ended March 31, Centron produced 25,500 units and incurred the following costs:
Direct Materials Direct Labor Variable factory overhead Fixed factory overhead Supervision Maintenance Other $10,710 47,175 51,940 24,500 23,700 16,800
Total production costs
Prepare a flexible budget for 20,000, 22,500, and 25,000 units of activity.
• b. Was Centron's experience in the quarter cited better or worse than anticipated? Prepare an appropriate performance report and explain your answer. • c. Explain the benefit of using flexible budgets (as opposed to static budgets) in the measurement of performance.