Practice Example

Robinson Company expects to produce $7,500$ units of the product ABC for the month of August $2022.$ Budgeted variable manufacturing costs per unit are direct materials $$9,$ direct labour $$15,$ and overhead $$25.$

Monthly budgeted fixed manufacturing overhead costs are $$15,000$ for depreciation and $$7,500$ for supervision. In the current month, Robinson produced $8,250$ units and incurred the following costs: direct materials $$50,850,$ direct labour $$111,300,$ variable overhead $$180,750,$ depreciation $$15,000,$ and supervision $$7,500.$

Instructions

Prepare a static budget report. $($Hint: The Budget column is based on estimated production of $7,500$ units while the Actual column is the actual costs incurred during the period. Determine if there is a Favourable or Unfavourable variance.$)$