Problem 10-3a (part level submission) hill company uses budgets in

Problem 10-3A (Part Level Submission)

Hill Company uses budgets in controlling costs. The August 2014 budget report for the company’s Assembling Department is as follows.

HILL COMPANY
Budget Report
Assembling Department
For the Month Ended August 31, 2014

     

Difference


Manufacturing Costs


Budget


Actual

Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N

Variable costs

       

   Direct materials

$52,200

$51,200

$1,000

F

   Direct labor

55,200

52,420

2,780

F

   Indirect materials

29,400

29,640

240

U

   Indirect labor

21,600

21,150

450

F

   Utilities

16,800

16,700

100

F

   Maintenance

9,600

9,710

110

U

      Total variable

184,800

180,820

3,980

F

Fixed costs

       

   Rent

12,590

12,590

–0–

N

   Supervision

16,020

16,020

–0–

N

   Depreciation

6,640

6,640

–0–

N

      Total fixed

35,250

35,250

–0–

N

Total costs

$220,050

$216,070

$3,980

F


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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