Budgeting Problem Solving
1. Nikoto Steel Co. Budgeted manufacturing costs for 50,000 tons of steel are:
Fixed manufacturing costs $50,000 per month
Variable Manufacturing costs $12.00 per ton of steel
Nikoto produced 40,000 tons of steel during March. How much is the flexible
budget for total manufacturing costs for March?
A. $520,000
B. $650,000
C. $480,000
D. $530,000
2. Champers, Inc. uses flexible budgets, At normal capacity of 16,000 units,
budgets manufacturing overhead is: $64,000 variable and $180,000 fixed. If
Champers had actual overhead cost of $250,000 for 18,000 units produced.
What is the difference between actual and budgeted costs?
A. $2000 unfavorable
B. $2000 favorable
C. $6000 unfavorable
D. $8000 favorable
3. The master budget of Windy Co. shows that the planned activity level for
next year is expected to be 50,000 machine hours. At this level of activity,
the following manufacturing overhead costs are expected:
Indirect labor $720,000
Machine supplies $180,000
Indirect materials $210,000
Depreciation on factory building $150,000
Total manufacturing overhead $1,260,000
A flexible budget for a level of activity of 60,000 machine hours would show
Total manufacturing overhead costs of:
A. $1,362,000
B. $1,512,000
C. $1,482,000
D. $1,260,000
4. Stone Industries uses flexible budgets. At normal capacity of 16,000 units,
budgeted manufacturing overhead is: $48,000 variable and $270,000 fixed.
If Stone had actual overhead costs of $321,000 for 18,000 units produced,
what is the difference between actual and budgeted costs?
A. $3000 unfavorable
B. $3000 favorable
C. $9000 unfavorable
D. $12,000 favorable
5. Smart manufacturing budget costs for 50,000 linear feet of block are:
Fixed manufacturing cost $24,000 per month
Variable manufacturing cost $16,000 per liner foor
Smart installed 40,000 linear feet of block during March. How much is budgeted
total manufacturing costs in March?
A. $640,000
B. $824,000
C. $800,000
D. $664,000
6. In the Goblette Manufacturing Company. Indirect labor is budgeted for
$108,000 and factory supervision is budgeted for $36,000 at normal
capacity of 160,000 direct labor hours. If 180,000 direct labor hours are
worked, flexible budget total for these costs is:
A. $144,000
B. $162,000
C. $157,500
D. $148,500
7. In the Ditcher Co., Indirect labor is budgeted for $72,000and factory
supervision is budgeted for $24,000 at normal capacity of 160,000 direct
labor hours. If 180,000 direct labor hours are worked, flexible budget total
for these costs is?
A. $96,000
B. $108,000
C. $105,000
D. $99,000
8. Kevin Jarvis Industries produced 192,000 units in 90,000 direct labor hours.
Production for the period was estimated at 198,000 units and 99,000 direct
labor hours. A flexible budget would compare budgeted costs and actual
costs, respectively, at:
A. 96,000 hours and 99,000 hours
B. 99,000 hours and 90,000 hours
C. 96,000 hours and 90,000 hours
D. 90,000 hours and 90,000 hours
9. At 18,000 direct labor hours, the flexible budget for indirect materials is
$36,000. If $37,400 are incurred at 18,400 direct labor hours. The flexible
budget report should show the following difference for indirect materials:
A. $1,400 unfavorable
B. $1400 favorable
C. $600 favorable
D. $600 unfavorable
10. A Company’s planned activity level for next year is expected to be 100,000
machine hours, At this level of activity, the company budgeted the
following manufacturing overhead costs:
Variable Fixed
Indirect material $140,000 Depreciation $60,000
Indirect labor $200,000 Taxes $10,000
Factory supplies $20,000 Supervision $50,000
A flexible budget prepared at the 80,000 machine hour’s level of activity would
show total manufacturing overhead costs of:
A. $288,000
B. $360,000
C. $384,000
D. $408,000
