Bumblebee Company estimates that 379,500 direct labor hours will be worked durin
ID: 2445037 • Letter: B
Question
Bumblebee Company estimates that 379,500 direct labor hours will be worked during the coming year, 2017, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year.
Fixed Overhead Costs
Variable Overhead Costs
$94,440
$174,570
73,320
75,900
25,560
53,130
21,120
94,875
20,880
37,950
$235,320
$436,425
It is estimated that direct labor hours worked each month will range from 24,900 to 36,900 hours.
During October, 24,900 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,870, Depreciation $6,110, Insurance $2,095, Rent $1,760, and Property taxes $1,740.
Variable overhead costs: Indirect labor $12,544, Indirect materials, $4,500, Repairs $3,406, Utilities $6,545, and Lubricants $2,740.
.b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)
Fixed Overhead Costs
Variable Overhead Costs
Supervision$94,440
Indirect labor$174,570
Depreciation73,320
Indirect materials75,900
Insurance25,560
Repairs53,130
Rent21,120
Utilities94,875
Property taxes20,880
Lubricants37,950
$235,320
$436,425
Explanation / Answer
Flexible budget report for October:
Year
October Month
Static Budget
Flexible Budget
Actual
Variance
Direct labor hours
379,500
$ 24,900
$ 24,900
A
B
B-A
Variable Overhead Costs:
Indirect labor
$ 174,570
$ 11,454
$ 12,544
$ 1,090
(174570/379500)*24900
Indirect materials
$ 75,900
$ 4,980
$ 4,500
$ (480)
(75900/379500)*24900
Repairs
$ 53,130
$ 3,486
$ 3,406
$ (80)
(53130/379500)*24900
Utilities
$ 94,875
$ 6,225
$ 6,545
$ 320
(94875/379500)*24900
Lubricants
$ 37,950
$ 2,490
$ 2,740
$ 250
(37950/379500)*24900
Fixed Overhead Costs:
Supervision
$ 94,440
$ 7,870
$ 7,870
$ -
(94440/12)
Depreciation
$ 73,320
$ 6,110
$ 6,110
$ -
(73320/12)
Insurance
$ 25,560
$ 2,130
$ 2,095
$ (35)
= (25560/12)
Rent
$ 21,120
$ 1,760
$ 1,760
$ -
= (21120/12)
Property taxes
$ 20,880
$ 1,740
$ 1,740
$ -
= (20880/12)
Flexible budget report for October:
Year
October Month
Static Budget
Flexible Budget
Actual
Variance
Direct labor hours
379,500
$ 24,900
$ 24,900
A
B
B-A
Variable Overhead Costs:
Indirect labor
$ 174,570
$ 11,454
$ 12,544
$ 1,090
(174570/379500)*24900
Indirect materials
$ 75,900
$ 4,980
$ 4,500
$ (480)
(75900/379500)*24900
Repairs
$ 53,130
$ 3,486
$ 3,406
$ (80)
(53130/379500)*24900
Utilities
$ 94,875
$ 6,225
$ 6,545
$ 320
(94875/379500)*24900
Lubricants
$ 37,950
$ 2,490
$ 2,740
$ 250
(37950/379500)*24900
Fixed Overhead Costs:
Supervision
$ 94,440
$ 7,870
$ 7,870
$ -
(94440/12)
Depreciation
$ 73,320
$ 6,110
$ 6,110
$ -
(73320/12)
Insurance
$ 25,560
$ 2,130
$ 2,095
$ (35)
= (25560/12)
Rent
$ 21,120
$ 1,760
$ 1,760
$ -
= (21120/12)
Property taxes
$ 20,880
$ 1,740
$ 1,740
$ -
= (20880/12)
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