Felix Company uses a flexible budget for manufacturing overhead based on direct
ID: 2477275 • Letter: F
Question
Felix Company uses a flexible budget for manufacturing overhead based on direct labor hours.Variable manufacturing overhead costs per direct labor hour are as follows:
Indirect Labor $0.70
Indirect Materials 0.50
Utilities 0.40
Fixed overhead costs per month are supervision $4000, depreciation $3000 and property taxes $800. The company believes it will normally operate in a range of 7,000-10,000 direct labor hours per month.
Prepare a monthly flexible manufacturing overhead budget for 2017 for the expected range of activity, using increments of 1,000 direct labor hours
Felix Company
Monthly Flexible Manufacturing Overhead Budget
For the Year 2017
Activity Level
Direct Labor Hours 7000 8000 9000 10000
Variable Cost
Indirect Labor ($0.70) 4,900 5,600 6,300 7,000
Indirect Materials ($0.50) 3,500 4,000 4,500 5,000
Utilities 2,800 3,200 3,600 4,000
Total VC ($1.60) 11,200 12,800 14,400 16,000
Fixed Costs
Supervision 4,000 4,000 4,000 4,000
Depreciation 3,000 3,000 3,000 3,000
Property Taxes 800 800 800 800
Total FC 7,800 7,800 7,800 7,800
Total Cost 19,000 20,600 22,200 23,800
PLEASE SHOW WORK - THANK YOU
Explanation / Answer
Felix Company Flexible Manufacturing Budget Direct labour Hours 7000 8000 9000 10000 Variable Manufacturing Overhead Indirect Labor 0.7 4900 (7000*.7) 5600 (8000*.7) 6300 (9000*.7) 7000 (10000*.7) Indirect Material 0.5 3500 (7000*.5) 4000 (8000*.5) 4500 (9000*.5) 5000 (10000*.5) Utilities 0.4 2800 (7000*.4) 3200 (8000*.4) 3600 (9000*.4) 4000 (10000*.4) Total variable Costs 11200 12800 14400 16000 Fixed Costs Supervision 4000 4000 4000 4000 Depreciation 3000 3000 3000 3000 Property Taxes 800 800 800 800 Total Fixed Costs 7800 7800 7800 7800 Total Costs 19000 20600 22200 23800 ( Total Variable Cost+ Total Fixed Costs)
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