Problem 10-2A (Part Level Submission) Variable costs Rate per Direct Labor Hour
ID: 2486970 • Letter: P
Question
Problem 10-2A (Part Level Submission)
Variable costs
Rate per Direct
Labor Hour
Annual Fixed Costs
The master overhead budget was prepared on the expectation that 482,900 direct labor hours will be worked during the year. In June, 44,800 direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variable—per direct labor hour: indirect labor $0.45, indirect materials $0.50, factory utilities $0.33, and factory repairs $0.24.
Fixed: same as budgeted.
(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 43,700 to 57,200 direct labor hours. Use increments of 4,500 direct labor hours. (List variable costs before fixed costs.)
(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.)
Problem 10-2A (Part Level Submission)
Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2017. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours.Variable costs
Rate per Direct
Labor Hour
Annual Fixed Costs
Indirect labor $0.43 Supervision $44,880 Indirect materials 0.52 Depreciation 18,000 Factory utilities 0.30 Insurance 17,880 Factory repairs 0.20 Rent 28,680
The master overhead budget was prepared on the expectation that 482,900 direct labor hours will be worked during the year. In June, 44,800 direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variable—per direct labor hour: indirect labor $0.45, indirect materials $0.50, factory utilities $0.33, and factory repairs $0.24.
Fixed: same as budgeted.
(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 43,700 to 57,200 direct labor hours. Use increments of 4,500 direct labor hours. (List variable costs before fixed costs.)
(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.)
Explanation / Answer
a.
B.
Zelmer Company Monthly Manufacturing Overhead Budget Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total Direct Labor Hours 43,700 43,700 43,700 48,200 48,200 48,200 52,700 52,700 52,700 57,200 57,200 57,200 605,400 Indirect Labor 18,791 18,791 18,791 20,726 20,726 20,726 22,661 22,661 22,661 24,596 24,596 24,596 260,322 Indirect Material 22,724 22,724 22,724 25,064 25,064 25,064 27,404 27,404 27,404 29,744 29,744 29,744 314,808 Factory Utilities 13,110 13,110 13,110 14,460 14,460 14,460 15,810 15,810 15,810 17,160 17,160 17,160 181,620 Factory Repairs 8,740 8,740 8,740 9,640 9,640 9,640 10,540 10,540 10,540 11,440 11,440 11,440 121,080 Fixed Costs Supervision 3,740 3,740 3,740 3,740 3,740 3,740 3,740 3,740 3,740 3,740 3,740 3,740 44,880 Depreciation 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 18,000 Insurance 1,490 1,490 1,490 1,490 1,490 1,490 1,490 1,490 1,490 1,490 1,490 1,490 17,880 Rent 2,390 2,390 2,390 2,390 2,390 2,390 2,390 2,390 2,390 2,390 2,390 2,390 28,680 Total Manufacturing Overheads 116,185 116,185 116,185 127,210 127,210 127,210 138,235 138,235 138,235 149,260 149,260 149,260 1,592,670Related Questions
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