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P24-3A Zelmer Company uses budgets in controlling costs.The August 2010 budget report for

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P24-3A Zelmer Company uses budgets in controlling costs.The August 2010 budget report for
the company’s Assembling Department is as follows.


Zelmer Company
Budget Report
Assembling Department
For the Month Ended August 31, 2010
 
Manufacturing Budget Actual Difference
Variable costs 
Direct materials   48,000  47,000  1,000  F 
Direct labor   54,000  51,300  2,700  F 
Indirect materials   24,000  24,200  200  U 
Indirect labor   18,000  17,500  500  F 
 Utilities   15,000  14,900  100  F 
 Maintenance   9,000  9,200  200  U 
 Total variable   168,000  164,100  3,900  F 
Fixed costs
 Rent   12,000  12,000  -  
 Supervision   17,000  17,000  -  
 Depreciation   7,000  7,000  -  
Total fixed  36,000  36,000  -  
Total costs  204,000  200,100  3,900

The monthly budget amounts in the report were based on an expected production of 60,000 units
per month or 720,000 units per year. The Assembling Department manager is pleased with the
report and expects a raise, or at least praise for a job well done.The company president, however,
is unhappy with the results for August, because only 58,000 units were produced.

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