Leigh Manufacturing Produces Widgets

question 49

Essay

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.

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Definitions:

Master Budget

An aggregated budget that represents a company's overall plan of action for a specified period, integrating individual budgets for income, spending, and capital expenditures.

Master Budget

A comprehensive financial planning document that consolidates all of an organization's individual budgets.

Sales Budget

A financial plan detail outlining projected sales for a specific period, guiding marketing and production strategies.

Capital Expenditures Budget

A financial plan detailing a company's projected spending on fixed assets such as buildings and equipment.