Skywalker Company budgeted a level of activity of 30,000 machine hours to be worked each month in the Painting Department. At this level of activity, manufacturing overhead costs were budgeted as follows:
Variable manufacturing overhead
Indirect materials
$ 40,000
Indirect labor
50,000
Repairs
7,500
Utilities
12,500
Fixed manufacturing overhead
Supervisory salaries
30,000
Other fixed expenses
1,000
Depreciation
15,000
Total manufacturing overhead
$156,000
Instructions
The actual manufacturing costs incurred for the month of March, when 26,000 machine hours were worked, are listed below on a partially completed budget report. Complete the budget report in a manner that would be most useful for evaluating the performance of the Machining Department manager for the month of March 2012.
Skywalker Company
Manufacturing Overhead Budget Report
Machining Department
For the Month Ended March 31, 2012, Variable manufacturing overhead
Indirect materials
Indirect labor
Repairs
Utilities
Total variable
Fixed manufacturing overhead
Supervisory salaries
Other fixed expenses
Depreciation
Total fixed
Total cost Budget at Actual at $ $ 38,700
45,500
8,900
11,900
105,000 $ 32,000
1,000
15,000
48,000
$153,000 Difference
Favorable F
Unfavorable U

PART B  Incremental Analysis
Globrite Manufacturing incurs unit costs of $16 ($10 variable and $6 fixed) in making a part for itsfinished product. A supplier offers to make 16,000 of the assembly part at $12 per unit. If the offer isaccepted, all variable costs and $2 of fixed costs per unit will be saved.
Instructions
(a) Prepare an analysis to show whether Globrite Manufacturing should make or buy the assembly part.
(b) Would your answer be different if Globrite could earn $38,000 of income with the facilitiescurrently used to make the part? (Show your calculations to prove your answer!)

Answer rating: 100% (QA)

Part A Budget Unit Cost Flexed budget Actual Difference FU Machine hours 30000 Costunits 26000 26000 ... View the full answer