During April, Cheatam Corporation Budgeted for 27,000 Customers, but Actually

question 41

Essay

During April, Cheatam Corporation budgeted for 27,000 customers, but actually served 23,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served:
Revenue: $4.10q
Wages and salaries: $33,300 + $1.10q
Supplies: $0.70q
Insurance: $8,600
Miscellaneous expense: $3,700 + $0.40q
Required:
Prepare the company's flexible budget for April based on the actual level of activity for the month.

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Definitions:

Work In Process

Partially finished goods that are in the midst of the production process, not yet ready for sale but representing a portion of inventory.

Direct Labor

The wages and related costs for personnel who are directly involved in the production process of a company's products or services.

Factory Overhead Applied

This term refers to the amount of indirect manufacturing costs allocated to products based on an estimated overhead rate.

Factory Overhead

The indirect costs related to manufacturing, including utilities, maintenance, and salaried staff expenses that cannot be directly traced to specific units produced.