Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current
Question:
Skelton Corporation had planned to produce 50,000 units of product during the first quarter of the current year. The company prepared the following budget on May 1:
Budgeted (50,000 units) | ||||
Variable costs: | ||||
Direct materials used | $ | 36,000 | ||
Direct labor | 45,000 | |||
Variable overhead | 22,500 | |||
Fixed costs: | ||||
Manufacturing overhead | 58,500 | |||
Total manufacturing costs | $ | 162,000 | ||
- | ||||
During the first quarter, Skelton produced 60,000 units and incurred total manufacturing costs of $184,000.
For the 2 questions, below, asked, show your calculations to help explain your choice.
a. Which of the following amounts should not be included in Skelton's flexible budget at a 60,000-unit level? Explain the reasoning behind your choice
A) Direct materials used, $43,200
B) Direct labor, $54,000
C) Variable overhead, $27,000
D) Fixed manufacturing overhead, $70,200
b. A performance report for Skelton's first quarter of operations using a flexible budget approach would show:
A) Actual costs over budget by $1,300.
B) Actual costs over budget by $11,700.
C) Actual costs over budget by $15,150.
D) Total costs per the flexible budget of $194,400.
Accounting Principles
ISBN: 978-0470534793
10th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso