Hagrid's furniture shop manufactures chairs

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Hagrid's furniture shop manufactures chairs. For the month of March 2021, management has projected sales of 6,000 chairs, selling at a price of $40/chair. Fixed costs include fixed manufacturing overhead budgeted at $9,000, advertising budgeted at $7,000 for the month, and office rent budgeted at $8,000 for the month. The budgeted variable cost standards are shown below. Variable overhead is allocated based on labor hours.

Budgeted Cost Standards

Budgeted Quantity

Budgeted Price

Budgeted Variable Cost, per mat

Direct Materials

6 lbs. wood

$1 per lb.

$6.00

Direct Labor

0.2 hours

$13 per DLH

$2.60

Variable Manufacturing Overhead

.02 hours

$3 per DLH

$0.60

Total Variable Standard Cost, per Unit

$9.20

For this assignment, let's assume no variable sales and administrative costs.

a) Prepare a February 2021 Static Budget

b) Toward the end of February, management reported that they will sell more chairs than anticipated, prepare a Flexible budget at 6,500 units, 7,000 units, 7,500 units AND 8,000 units

c) At the end of February, management reported the following actual detailed information:

Total sales in units

7,500 chairs

Total sales in dollars

$307,500

Total material used

46,500 lbs.

Total material value

$58,125

Total hours worked

2,250 hrs.

Total wages paid

$28,125

Total variable overhead

$5,625

NOTE: All the fixed costs were the same as budgeted.

i) Prepare an actual VS. Static Budget Variance for February

II) Prepare an actual VS. Flexible Budget Variance for February 2021