HammerTime is preparing their 2019 budget. They want to look at static budgets and flexible budgets to determine which is best for them. They estimate sales/production will be between 2,000,000 and 4,000,000 boxes of nails per month. They want to be able to understand their budget variances as well.

Required:

Prepare some budgets in Excel for HammerTime.

a) Show the static budget based on 3,000,000 units (boxes) produced.

b) Show the flexible budget based on 2,000,000 units (boxes) produced.

c) Show the flexible budget based on 4,000,000 units (boxes) produced.

d) Show the flexible budget cost formula(s) for HammerTime.

Monthly Budget Data:

Selling price per unit: $5.00 per box

Raw Materials Costs $1.50 per box

Packaging Costs $0.80 per box

Salary and Wages Costs $300,000 per month

OT for production over 3,000,000 units $0.70 per box

Fringe Benefits. 50% of wages and OT

Electricity $0.20 per box

Waste and other costs $500,000 per month

Rent Costs $60,000 per month

Insurance Costs $60,000 per month

Depreciation Costs $240,000 per month

Answer rating: 100% (QA)

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