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Capstone, Inc. (Chapter 9)

Capstone, Inc. is continuing its budget preparations and had the following static budget and overhead costs for March 2020.

CAPSTONE, INC.

Manufacturing Overhead Budget (Static)

For the Month of March 2020

Budgeted production in units 117,500

Budgeted costs

Indirect materials $ 5,875

Indirect labor 14,100

Utilities 11,750

Maintenance 8,225

Salaries 45,000

Depreciation 16,800

Property taxes 3,000

Insurance 1,200

Janitorial 1,500

Total budgeted costs $107,450

CAPSTONE, INC.

Manufacturing Overhead Costs (Actual)

For the Month of March 2020

Production in units 118,500

Costs

Indirect materials $ 5,910

Indirect labor 14,195

Utilities 11,880

Maintenance 8,275

Salaries 45,000

Depreciation 16,800

Property taxes 3,000

Insurance 1,200

Janitorial 1,500

Total costs $107,760

Capstone, Inc. produced 118,500 units in March rather than the budgeted number of units.

Instructions

1. Prepare a flexible overhead budget based on the following amounts produced.
   1. 115,500 units
   2. 116,500 units
   3. 117,500 units
   4. 118,500 units
   5. 119,500 units

2. Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March.

3. Prepare a performance report for the manufacturing overhead for March, assuming only variable costs are controllable.

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