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ACCT 386 - Week 6 - Homework - Question 1

ACCT 386 - Week 6 - Homework - Question 1
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ACCT 386 - Week 6 - Homework - Question 1

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Question 1

You have just been hired by SecuriDoor Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control.

       After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for April:

 

Cost Formula

Actual Cost in April

  Utilities

  $16,200 plus $.16 per machine-hour

$

21,360    

  Maintenance

  $38,800 plus $1.90 per machine-hour

$

72,500    

  Supplies

  $.40 per machine-hour

$

8,200    

  Indirect labor

  $94,200 plus $1.60 per machine-hour

$

128,700    

  Depreciation

  $67,900

$

69,600    


During April, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during April.