Problem 10-2A (Part Level Submission) Variable costs Rate per Direct Labor Hour

Question

Problem 10-2A (Part Level Submission)

Variable costs

Rate per Direct
Labor Hour

Annual Fixed Costs

(a) & (b)

ZELMER COMPANY
Monthly Manufacturing Overhead Flexible Budget
Ironing Department
For the Year 2014

ZELMER COMPANY
Ironing Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended June 30, 2014

Difference

Budget

Actual Costs

Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N

Problem 10-2A (Part Level Submission)

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 2014. 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 $0.42 Supervision $46,416 Indirect materials 0.53 Depreciation 17,064 Factory utilities 0.31 Insurance 13,236 Factory repairs 0.21 Rent 28,188
The master overhead budget was prepared on the expectation that 479,200 direct labor hours will be worked during the year. In June, 44,100 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 $0.51, Factory utilities $0.35, and Factory repairs $0.26.

Fixed: same as budgeted.

Explanation / Answer

Problem 10-2A (Part Level Submission) Variable costs Rate per Direct Labor Hour

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