Bumblebee Company estimates that 388,800 direr, labor hours will be worked durin

Question

Bumblebee Company estimates that 388,800 direr, 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 27,600 to 35,700 hours. During October, 27,600 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,720. Depreciation $5,600. Insurance $2,135, Rent $1,930, and Property taxes $1,770. Variable overhead costs: Indirect labor $13,696, Indirect materials, $7,328. Repairs $4,376. Utilities $4,550, and Lubricants $2,272. Prepare a monthly manufacturing overhead flexible budget for each increment of 2.700 direct labor hours over the relevant range for the year ending December, 31, 2017. Prepare a flexible budget report for October.

Explanation / Answer

Bumblebee Company All Amounts in $ Monthly Manufacturing Overhead Flexible Budget For the Year 2017 Activity Level Direct Labor Hours 27600 30300 33000 35700 Variable Costs Indirect Labor 12696 13938 15180 16422 Indirect Materials 7728 8484 9240 9996 Repairs 4416 4848 5280 5712 Utilities 4140 4545 4950 5355 Lubricants 1932 2121 2310 2499 Total Variable Costs 30912 33936 36960 39984 Fixed Costs Supervision 7720 7720 7720 7720 Depreciation 5600 5600 5600 5600 Insurance 2160 2160 2160 2160 Rent 1930 1930 1930 1930 Property Taxes 1770 1770 1770 1770 Total Fixed Costs 19180 19180 19180 19180 Total Costs 50092 53116 56140 59164

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