The Bonita staff has prepared the
annual manufacturing budget for the rotomolded line based on an
estimated annual production of 4,880 kayaks during 2020.
Each kayak will require 68 pounds of polyethylene powder
and a finishing kit (rope, seat, hardware, etc.). The polyethylene
powder used in these kayaks costs $1.30 per pound, and the
finishing kits cost $250 each. Each kayak will use two kinds
of labor—2 hours of type I labor from people who run the oven
and trim the plastic, and 3 hours of work from type II
workers who attach the hatches and seat and other hardware. The
type I employees are paid $17 per hour, and the type II are
paid $14 per hour.
Manufacturing overhead is budgeted at $425,880 for 2020,
broken down as follows.
Variable costs
Indirect materials
$53,680
Manufacturing supplies
73,200
Maintenance and utilities
97,600
224,480
Fixed costs
Supervision
78,000
Insurance
14,800
Depreciation
108,600
201,400
Total
$425,880
During the first quarter, ended March 31,
2020, 1,270 units were actually produced with the
following costs.
Polyethylene powder
$114,068
Finishing kits
317,750
Type I labor
43,180
Type II labor
54,530
Indirect materials
13,970
Manufacturing supplies
19,076
Maintenance and utilities
28,270
Supervision
17,100
Insurance
3,700
Depreciation
27,150
Total
$638,794
Assuming the rotomolded line is treated as a cost center,
prepare a flexible budget report for manufacturing for the quarter
ended March 31, 2020, when 1,270 units were produced.