Problem 10-2A Variable costs Rate per Direct Labor Hour Annual Fixed Costs ZELME
ID: 2411180 • Letter: P
Question
Problem 10-2A
Variable costs
Rate per Direct
Labor Hour
Annual Fixed Costs
ZELMER COMPANY
Monthly Manufacturing Overhead Flexible Budget
Ironing Department
For the Year 2017
ZELMER COMPANY
Ironing Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended June 30, 2017
Difference
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
SAVE FOR LATER
SUBMIT ANSWER
Problem 10-2A
Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2017. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours.Variable costs
Rate per Direct
Labor Hour
Annual Fixed Costs
Indirect labor $0.41 Supervision $43,440 Indirect materials 0.51 Depreciation 19,800 Factory utilities 0.31 Insurance 15,720 Factory repairs 0.24 Rent 30,840The master overhead budget was prepared on the expectation that 479,400 direct labor hours will be worked during the year. In June, 45,300 direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variable—per direct labor hour: indirect labor $0.45, indirect materials $0.49, factory utilities $0.33, and factory repairs $0.29.
Fixed: same as budgeted. Your answer is partially correct. Try again. (a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 37,400 to 52,400 direct labor hours. Use increments of 5,000 direct labor hours. (List variable costs before fixed costs.)
ZELMER COMPANY
Monthly Manufacturing Overhead Flexible Budget
Ironing Department
For the Year 2017
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
$ $ $ $Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
$ $ $ $(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.)
ZELMER COMPANY
Ironing Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended June 30, 2017
Difference
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
$ $ $FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
$ $ $FavorableUnfavorableNeither Favorable nor Unfavorable
Your answer is incorrect. Try again. State the formula for computing the total budgeted costs for the Ironing Department. (Round variable cost per unit to 2 decimal places, e.g. 1.55.)The formula is = $ + total variable costs of $ per direct labor hour. By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Question Attempts: Unlimited
SAVE FOR LATER
SUBMIT ANSWER
Explanation / Answer
Answer
Working
Activity Level
A
Direct labor Hours
37400
42400 [37400 + 5000]
47400 [42400 + 5000]
52400 [47400+ 5000]
Variable Cost:
B = A x $0.41
Indirect labor
$ 15,334.00
$ 17,384.00
$ 19,434.00
$ 21,484.00
C = A x $0.51
Indirect material
$ 19,074.00
$ 21,624.00
$ 24,174.00
$ 26,724.00
D = A x $0.31
Factory Utilities
$ 11,594.00
$ 13,144.00
$ 14,694.00
$ 16,244.00
E = A x $0.24
Factory Repairs
$ 8,976.00
$ 10,176.00
$ 11,376.00
$ 12,576.00
F=B+C+D+E
Total Variable Cost
$ 54,978.00
$ 62,328.00
$ 69,678.00
$ 77,028.00
Fixed Costs:
G
Supervision
$ 3,620.00
$ 3,620.00
$ 3,620.00
$ 3,620.00
H
Depreciation
$ 1,650.00
$ 1,650.00
$ 1,650.00
$ 1,650.00
I
Insurance
$ 1,310.00
$ 1,310.00
$ 1,310.00
$ 1,310.00
J
Rent
$ 2,570.00
$ 2,570.00
$ 2,570.00
$ 2,570.00
K=G+H+I+J
Total Fixed Cost
$ 9,150.00
$ 9,150.00
$ 9,150.00
$ 9,150.00
F + K
Total Cost
$ 64,128.00
$ 71,478.00
$ 78,828.00
$ 86,178.00
Activity Level
Flexible Budget
Actual Results
Difference
Direct labor Hours
45300
45300
Variable Cost:
Indirect labor
$ 18,573.00
$ 20,385.00
$ 1,812.00
Unfavourable as Actual Cost is more than Budgeted
Indirect material
$ 23,103.00
$ 22,197.00
$ 906.00
Favourable as Actual cost is Less than Budgeted.
Factory Utilities
$ 14,043.00
$ 14,949.00
$ 906.00
Unfavourable as Actual Cost is more than Budgeted
Factory Repairs
$ 10,872.00
$ 13,137.00
$ 2,265.00
Unfavourable as Actual Cost is more than Budgeted
Total Variable Cost
$ 66,591.00
$ 70,668.00
$ 4,077.00
Unfavourable as Actual Cost is more than Budgeted
Fixed Costs:
Supervision
$ 3,620.00
$ 3,620.00
$ -
Neither Favourable nor Unfavourable
Depreciation
$ 1,650.00
$ 1,650.00
$ -
Neither Favourable nor Unfavourable
Insurance
$ 1,310.00
$ 1,310.00
$ -
Neither Favourable nor Unfavourable
Rent
$ 2,570.00
$ 2,570.00
$ -
Neither Favourable nor Unfavourable
Total Fixed Cost
$ 9,150.00
$ 9,150.00
$ -
Neither Favourable nor Unfavourable
Total Cost
$ 75,741.00
$ 79,818.00
$ 4,077.00
Unfavourable as Actual Cost is more than Budgeted
Working
Variable costs Rate per Direct
Labor Hour
Annual Fixed Costs
Indirect labor
$ 0.41
Supervision
$ 43,440.00
Indirect materials
$ 0.51
Depreciation
$ 19,800.00
Factory utilities
$ 0.31
Insurance
$ 15,720.00
Factory repairs
$ 0.24
Rent
$ 30,840.00
Total Variable cost per DLH
$ 1.47
Total Annual Fixed Cost
$ 1,09,800.00
Monthly Fixed Cost
$ 9,150.00
Monthly Cost Formula = $ 9,150 + total variable cost of $ 1.47 per direct labor hour.
Annual Cost Formula = $ 109,800 + total variable cost of $ 1.47 per direct labor hour.
Working
Activity Level
A
Direct labor Hours
37400
42400 [37400 + 5000]
47400 [42400 + 5000]
52400 [47400+ 5000]
Variable Cost:
B = A x $0.41
Indirect labor
$ 15,334.00
$ 17,384.00
$ 19,434.00
$ 21,484.00
C = A x $0.51
Indirect material
$ 19,074.00
$ 21,624.00
$ 24,174.00
$ 26,724.00
D = A x $0.31
Factory Utilities
$ 11,594.00
$ 13,144.00
$ 14,694.00
$ 16,244.00
E = A x $0.24
Factory Repairs
$ 8,976.00
$ 10,176.00
$ 11,376.00
$ 12,576.00
F=B+C+D+E
Total Variable Cost
$ 54,978.00
$ 62,328.00
$ 69,678.00
$ 77,028.00
Fixed Costs:
G
Supervision
$ 3,620.00
$ 3,620.00
$ 3,620.00
$ 3,620.00
H
Depreciation
$ 1,650.00
$ 1,650.00
$ 1,650.00
$ 1,650.00
I
Insurance
$ 1,310.00
$ 1,310.00
$ 1,310.00
$ 1,310.00
J
Rent
$ 2,570.00
$ 2,570.00
$ 2,570.00
$ 2,570.00
K=G+H+I+J
Total Fixed Cost
$ 9,150.00
$ 9,150.00
$ 9,150.00
$ 9,150.00
F + K
Total Cost
$ 64,128.00
$ 71,478.00
$ 78,828.00
$ 86,178.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.