Atlanta Company is preparing its manufacturing overhead budget for 2017. Relevan
ID: 2462022 • Letter: A
Question
Atlanta Company is preparing its manufacturing overhead budget for 2017. Relevant data consist of the following.
Prepare the manufacturing overhead budget for the year, showing quarterly data.
Explanation / Answer
Solution:
Manufacturing Overheads include Variable Manufacturing Overheads and Fixed Manufacturing overheads. In other words manufacturing overheads is the sum of indirect material cost, indirect labor cost and indirect expenses incurred in relation to the manufacturing of product.
Manufacturing Overhead Budget for the year 2017
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total
Budgeted Production Units
10,100
12,100
14,100
16,100
52,400
Total Direct Labor Hours (1.5 Hours Per Unit)
15,150
18,150
21,150
24,150
78,600
Variable Overhead Costs per direct labor hours
Total Indirect Material Cost ($0.70 per direct labor hours)
$10,605
$12,705
$14,805
$16,905
$55,020
Total Indirect Labor Cost ($1.20 per direct labor hours)
$18,180
$21,780
$25,380
$28,980
$94,320
Total Maintenance Cost ($0.50 per direct labor hours)
$7,575
$9,075
$10,575
$12,075
$39,300
Total Variable Overhead Costs (A)
$36,360
$43,560
$50,760
$57,960
$188,640
Fixed Overhead Costs per quarter
Supervisor Salaries
$36,000
$36,000
$36,000
$36,000
$144,000
Depreciation (assumed manufacturing overhead)
$17,000
$17,000
$17,000
$17,000
$68,000
Maintenance Cost
$13,000
$13,000
$13,000
$13,000
$52,000
Total Fixed Overhead Costs (B)
$66,000
$66,000
$66,000
$66,000
$264,000
Total Manufacturing Overhead (A+B)
$102,360
$109,560
$116,760
$123,960
$452,640
Manufacturing Overhead Budget for the year 2017
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Total
Budgeted Production Units
10,100
12,100
14,100
16,100
52,400
Total Direct Labor Hours (1.5 Hours Per Unit)
15,150
18,150
21,150
24,150
78,600
Variable Overhead Costs per direct labor hours
Total Indirect Material Cost ($0.70 per direct labor hours)
$10,605
$12,705
$14,805
$16,905
$55,020
Total Indirect Labor Cost ($1.20 per direct labor hours)
$18,180
$21,780
$25,380
$28,980
$94,320
Total Maintenance Cost ($0.50 per direct labor hours)
$7,575
$9,075
$10,575
$12,075
$39,300
Total Variable Overhead Costs (A)
$36,360
$43,560
$50,760
$57,960
$188,640
Fixed Overhead Costs per quarter
Supervisor Salaries
$36,000
$36,000
$36,000
$36,000
$144,000
Depreciation (assumed manufacturing overhead)
$17,000
$17,000
$17,000
$17,000
$68,000
Maintenance Cost
$13,000
$13,000
$13,000
$13,000
$52,000
Total Fixed Overhead Costs (B)
$66,000
$66,000
$66,000
$66,000
$264,000
Total Manufacturing Overhead (A+B)
$102,360
$109,560
$116,760
$123,960
$452,640
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