Wells Enterprises manufactures a component that is processed successively by Dep

Question

Wells Enterprises manufactures a component that is processed successively by Department I and Department II. Manufacturing overhead is applied to units produced at the following budget costs:

These budgeted overhead costs per unit are based on the normal volume of production of 5,000 units per month. In January, variable manufacturing overhead in Department II is expected to be 25 percent above budget because of major scheduled repairs to equipment. The company plans to produce 8,000 units during January.

Prepare a budget for manufacturing overhead costs in January using three column headings: Total, Department I, and Department II. (Omit the "$" sign in your response.)

Wells Enterprises manufactures a component that is processed successively by Department I and Department II. Manufacturing overhead is applied to units produced at the following budget costs:

Explanation / Answer

WELLS ENTERPRISE Manufacturing Overhead Budget Particulars Dept 1 Dept 2 Total Variable costs variable manufacturinv Overhead 64,000 80,000 $144,000 Total variable costs 64,000 80,000 $144,000 Fixed manufacturing overheads 120,000 96,000 $216,000 Total manufacturing overhead $184,000 176,000 $360,000

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