Step 5: Manufacturing Overhead Budget Buff Company expects variable overhead cos
ID: 2335733 • Letter: S
Question
Step 5: Manufacturing Overhead Budget
Buff Company expects variable overhead costs to fluctuate with production volume according to the following rates:
Indirect materials: $0.90 per direct labor
Indirect labor: $1.70 per direct labor
Utilities: $0.30 per direct labor
Maintenance: $0.10 per direct labor
Buff Company also incurs fixed overhead costs. The amounts of fixed overhead costs are already provided in the budget below. Use this information to complete the manufacturing overhead budget.
Buff Company Manufacturing Overhead Sales Budget
For the year ending December 31, 2017
Variable costs Indirect materials ($0.90/hour) Q1_________ Q2_________ Q3_________ Q4_________
Indirect labor ($1.70/hour) Q1_________ Q2_________ Q3_________ Q4_________
Utilities ($0.30/hour) Q1_________ Q2_________ Q3_________ Q4_________
Maintenance ($0.10/hour) Q1_________ Q2_________ Q3_________ Q4_________
Total variable costs Q1_________ Q2_________ Q3_________ Q4_________
Fixed costs
Supervisory salaries Q1 $37,600 Q2 $37,600 Q3 $37,600 Q4 $37,600 Total in a year $150400
Depreciation Q1 $2,900 Q2 $2,900 Q3 $2,900 Q4 $2,900 Total in a year $11600
Property taxes and insurance Q1 $1,600 Q2 $1,600 Q3 $1,600 Q4 $1,600 Total in a year $6,400
Maintenance Q1 $3,400 Q2 $3,400 Q3 $3,400 Q4 $3,400Total in a year $13,600
Total fixed costs Q1_________ Q2_________ Q3_________ Q4_________
Total manufacturing overhead Q1_________ Q2_________ Q3_________ Q4_________
Direct labor hours Q1_________ Q2_________ Q3_________ Q4_________
Using the yearly amounts, what is the annual budgeted overhead rate per direct labor hour?
Step 6: Selling and Administrative Expense Budget
Buff Company expects variable selling and administrative expenses to fluctuate with unit sales volume according to the following rates:
Sales commission $3.60 per unit sold
Freight-out: $2.80 per unit sold
Buff Company also incurs fixed selling and administrative expenses. The amounts of fixed selling and administrative expenses are already provided in the budget below. Use this information to complete the selling and admin. expense budget
Buff Company Selling and Admi Sales Budget For the year ending December 31, 2017
Budgeted sales in units Q1 1,800 Q2 1,700 Q3 2,300 Q4 2,800 Total in a year 8,600
Variable expenses
Sales commissions ($3.60 per unit) Q1_________ Q2_________ Q3_________ Q4_________
Freight-out ($2.80 per unit) Q1_________ Q2_________ Q3_________ Q4_________
Total variable expenses Q1_________ Q2_________ Q3_________ Q4_________
Fixed expenses Advertising Q1 $3,200 Q2 $3,200 Q3 $3,200 Q4 $3,200 Total in a year $12,800
Sales salaries Q1 $13,600 Q2 $13,600 Q3 $13,600 Q4 $13,600 Total in a year $54,400
Office salaries Q1 $7,000 Q2 $7,000 Q3 $7,000 Q4 $7,000 Total in a year $28,000
Depreciation Q1 $800 Q2 $800 Q3 $800 Q4 $800 Total in a year $3,200
Property taxes and insurance Q1 $1,000 Q2 $1,000 Q3 $1,000 Q4 $1,000 Total in a year $4,000
Total fixed expenses Q1_________ Q2_________ Q3_________ Q4_________
Total selling and administrative expenses Q1_________ Q2_________ Q3_________ Q4_________
Step 7: Budgeted Income Statement
Complete the following schedule to determine the cost of goods sold:
Cost to produce one product
Direct materials Quantity 1.50 Unit cost $1.00
Direct labor Quantity 2.50 Unit cost $12.00
Manufacturing overhead Quantity 2.50
Total unit cost _________
Cost of goods sold
Total Unit cost × Number of units budgeted to be sold during 2017 = Budgeted Cost of Goods Sold________
Additional information:
Interest expense for 2017: $1,000
Income tax expense for 2017: $16,500
Use the information above as well as data from the other operating budgets to complete the Budgeted Income Statement
Buff Company Budgeted Income Statement For the Year Ending December 31, 2017
Sales________
Cost of goods sold_______
Gross profit_______
Selling and administrative expenses______
Income from operations________
Interest expense______
Income before income taxes______
Income tax expense_______
Net income_______
Explanation / Answer
Since you have not given the sales price per units sold a partial income statement is prepared (Formula to arrive at net income is also provided)
Buff Company Manufacturing Overhead Budget For the year ending December 31, 2017Variable Cost Q1 Q2 Q3 Q4 Year Indirect materials: $0.90 per direct labor
4050 3825 5175 6300 19350 Indirect labor: $1.70 per direct labor
7650 7225 9775 11900 36550 Utilities: $0.30 per direct labor
1350 1275 1725 2100 6450 Maintenance: $0.10 per direct labor
450 425 575 700 2150 Total Variable Cost 13500 12750 17250 21000 64500 Fixed Cost Supervisory salaries 37600 37600 37600 37600 150400 Depreciation 2900 2900 2900 2900 11600 Property taxes and insurance 1600 1600 1600 1600 6400 Maintenance 3400 3400 3400 3400 13600 Total fixed costs 45500 45500 45500 45500 182000 Total manufacturing overhead 59000 58250 62750 66500 246500 Direct labor hours 4500 4250 5750 7000 21500 Using the yearly amounts, what is the annual budgeted overhead rate per direct labor hour?
246500/21500=11.47 per direct Labor hr
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