Bumblebee Company estimates that 402,600 direct labor hours will be worked durin

Question

Bumblebee Company estimates that 402,600 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 It is estimated that direct labor hours worked each month will range from 22,800 to 32,100 hours. During October. 22,800 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,440, Depreciation $6,120, Insurance $2,125, Rent $1,780, and Property taxes $1,870. Variable overhead costs: Indirect labor $10,566. Indirect materials. $4,260. Repairs $2,240, Utilities $3,740, and Lubricants $2,610. (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,100 direct labor hours over the relevant range for the year ending December 31. 2017. (List variable costs before fixed costs.) (b) Prepare a flexible budget report for October (List variables costs before fixed costs.)

Explanation / Answer

Bumblee Company Packing Department Monthly manufactruing Overhead For the year 2017 Activity level Direct Labor Hours 22800 25900 29000 32100 varaible Cost Indirect labour 9576 10878 12180 13482 Indirect material 4560 5180 5800 6420 Utilities 3420 3885 4350 4815 Lubricants 2280 2590 2900 3210 Repair 2280 2590 2900 3210 Total Variable Cost 22116 25123 28130 31137 Fixed Cost Supervision              5,056              5,744       6,431         7,118 Depriciation              4,159              4,725       5,290         5,855 Insurance              1,475              1,675       1,876         2,076 Rent              1,210              1,374       1,539         1,703 Propert tax              1,271              1,444       1,616         1,789 Total Fixed Cost            13,170            14,961     16,752       18,542 Total Cost            35,286            40,084     44,882       49,679 Bumblee Company Packing Department Monthly manufactruing Overhead For the year 2017 Activity level Budget Cost Actual Cost Difference (favorable/Unfavrable) Direct Labor Hours 22800 22800 varaible Cost Indirect labour 9576 10556 980 U Indirect material 4560 4260 300 F Utilities 3420 3740 320 U Lubricants 2280 2640 360 U Repair 2280 2240 40 F Total Variable Cost 22116 23436 1320 U

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