Bumblebee Company estimates that 381,800 direct labor hours will be worked durin

Question

Bumblebee Company estimates that 381,800 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.

Fixed Overhead Costs

Variable Overhead Costs

$90,720

$160,356

75,000

106,904

25,440

45,816

21,720

57,270

12,360

26,726

$225,240

$397,072

It is estimated that direct labor hours worked each month will range from 23,900 to 33,200 hours.

During October, 23,900 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: Supervision $7,560, Depreciation $6,250, Insurance $2,070, Rent $1,810, and Property taxes $1,030.

Variable overhead costs: Indirect labor $11,088, Indirect materials, $6,372, Repairs $2,818, Utilities $3,895, and Lubricants $2,033.

(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.)

BUMBLEBEE COMPANY
Packaging Department
Monthly Manufacturing Overhead Flexible Budget
For the Year 2017

(b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)

BUMBLEBEE COMPANY
Packaging Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended October 31, 2017

Difference

Budget

Actual Costs

Favorable
Unfavorable
Neither Favorable
nor Unfavorable

Fixed Overhead Costs

Variable Overhead Costs

Supervision

$90,720

Indirect labor

$160,356

Depreciation

75,000

Indirect materials

106,904

Insurance

25,440

Repairs

45,816

Rent

21,720

Utilities

57,270

Property taxes

12,360

Lubricants

26,726

$225,240

$397,072

Explanation / Answer

Working Notes:

Variable Overhead Costs Amount ($) Budgeted labour hours cost per unit ($) Indirect Labour 160356 381800 0.42 Indirect materials 106904 381800 0.28 Repairs 45816 381800 0.12 Utilities 57270 381800 0.15 Lubricants 26726 381800 0.07 Fixed overhead costs Amount per year($) Amount per month ($) Supervision 90,720.00 7,560.00 Depreciation                      75,000.00                                6,250.00 Insurance                      25,440.00                                2,120.00 Rent                      21,720.00                                1,810.00 Property taxes                      12,360.00                                1,030.00

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