Exercise 23-13 Pine Knoll Wood Products Company prepared the following factory o

Question

Exercise 23-13 Pine Knoll Wood Products Company prepared the following factory overhead cost budget for the Press Department for February 2008, during which it expected to require 10,000 hours of productive capacity in the department. Variable overhead cost: Indirect factory labor $28,000 Power and light 4,500 Indirect materials 22,000 Total variable cost $54,000 Fixed overhead cost: Supervisory salaries $36,000 Depr of paint&equip; 30,000 Insurance & prop taxes 8,000 Total fixed cost $74,000 Total factory overhead cost $128,500 Assuming that the estimated costs for March are the same as for February , prepare a flexible factory overhead cost budget for the Press Department for March for 8,000, 10,000, and 12,000 hours of production.

Explanation / Answer

flexible factory overhead cost budget Particulars 8000 hrs 10000 hrs 12000 hrs ============================================================================= Variable Overheads: Indirect Labour $22,400 $28,000 $33,600 Power and light $3,600 $4,500 $5,400 Indirect materials $17,600 $22,000 $26,400 ============================================================================== Total variable cost $43,600 $54,500 $65,400 ============================================================================== Fixed Over head Supervisor salaries $36,000 $36,000 $36,000 Depreciation $30,000 $30,000 $30,000 Insurance & taxes $8,000 $8,000 $8,000 ================================================================================= Total fixed cost $74,000 $74,000 $74,000 ================================================================================= Total Costs $1,17,600 $1,28,500 $1,39,400

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