They want to look at static budgets and flexible budgets to determine which is best for them.

Homework case help needed

HammerTime is preparing their 2019 budget. They want to look at static budgets and flexible budgets to determine which is best for them. They estimate sales/production will be between 2,000,000 and 4,000,000 boxes of nails per month. They want to be able to understand their budget variances as well.

selling price per unit - 5.00 per unit

Raw materials costs - 1.50 per unit

packaging costs - .80 per unit

salary and wages costs - 300,000 per month

ot for production over 3,000,000 units

fringe benefits - 50% of wages and ot

electricity - .20 per unit

waste and other costs - .10 per unit

rent costs - 500,000 per month

insurance costs - 60,000 per month

depreciation costs - 240,000

Question 1: Prepare some budgets in Excel for HammerTime.

a)     Show the static budget based on 3,000,000 units (boxes) produced.

b)    Show the flexible budget based on 2,000,000 units (boxes) produced.

c)     Show the flexible budget based on 4,000,000 units (boxes) produced.

d)    Show the flexible budget cost formula(s) for HammerTime.

Info for Question 1 above

Info For Question 2: January actual

Production - 3,250,500 units

sales - 16,250,000

ingredient costs - 4,795,000

packaging costs - 2,600,000

salary and wages - 280,000

overtime - 195,500

fringe benefits - 237,750

electricity - 650,000

waste and other costs - 365,000

rent - 500,000

insurance - 65,000

depreciation costs - 240,000

Question 2: The month of January 2019 is complete, and HammerTime wants to compare their budget to their actual results. Actual results are shown in the table above.

a)     Compare January's actual results to the static budget you created in Question 1.

b)    Analyze the static budget variances. Be sure to break out price and volume variances and whether they are favorable or unfavorable for each line item. Provide possible explanations.

c)     Create the flexible budget based on actual units produced for January.

d)    Compare actual results to budgeted results for the flexible budget.

e)    Analyze the flexible budget variances. Be sure to include the variance amount and whether the variance is favorable or unfavorable for each line item. Provide possible explanations.