Leigh Manufacturing produces widgets.Prior to the start of September,the company's controller estimated September's production to be 900 units.Each unit requires two hours of direct labour at a cost of $12 per direct labour hour.
At the end of September,it was determined that actual production was 860 units and actual direct labour cost was $19 500.
Required:
A. Prepare a static budget for September.
B. Prepare a flexible budget for September.
C. Which type of budget should be compared to the actual direct labour cost for control purposes? Explain.

Question

Quizplus · Accepted Answer

The Answer of Leigh Manufacturing produces widgets.Prior to the start of September,the company's controller estimated September's production to be 900 units.Each unit requires two hours of direct labour at a cost of $12 per direct labour hour.
At the end of September,it was determined that actual production was 860 units and actual direct labour cost was $19 500.
Required:
A. Prepare a static budget for September.
B. Prepare a flexible budget for September.
C. Which type of budget should be compared to the actual direct labour cost for control purposes? Explain.

Leigh Manufacturing Produces Widgets