Lowell Companys manufacturing overhead budget for the first quarter of 2012 cont

Question

Lowell Companys manufacturing overhead budget for the first quarter of 2012 contained the following data.

Variable Costs

Fixed Costs

Actual variable costs were: indirect materials $14,802, indirect labor $9,424, utilities $9,718, and maintenance $5,050. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,513. The actual activity level equaled the budgeted level.

All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.

(a) Prepare a manufacturing overhead flexible budget report for the first quarter.

LOWELL COMPANY
Manufacturing Overhead Flexible Budget Report
For the Quarter Ended March 31, 2012

Difference

Budget

Actual

Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N

(b) Prepare a responsibility report for the first quarter.

LOWELL COMPANY
Manufacturing Overhead Responsibility Report
For the Quarter Ended March 31, 2012

Difference

Controllable Costs

Budget

Actual

Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N

Variable Costs

Fixed Costs

Indirect materials $11,633 Supervisory salaries $35,906 Indirect labor 10,472 Depreciation 6,179 Utilities 7,595 Property taxes and insurance 7,190 Maintenance 5,507 Maintenance 5,751

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Part A:

LOWELL COMPANY
Manufacturing Overhead Flexible Budget Report
For the Quarter Ended March 31, 2012

Part B:

LOWELL COMPANY
Manufacturing Overhead Responsibility Report
For the Quarter Ended March 31, 2012

Notes:

Part B Maintenance Costs will include both Fixed and Variable Costs.

Thanks.

Difference Budget Actual Favorable F
Unfavorable U
Neither Favorable
nor Unfavorable N Variable Costs Indirect Material 11633 14802 3169 U Indirect Labor 10472 9424 1048 F Utilities 7595 9718 2123 U Maintenance 5507 5050 457 F Total Variable Costs 35207 38994 3787 U Fixed Costs Supervisory Salaries 35906 35906 0 Depreciation 6179 6179 0 Property Taxes and Insurance 7190 8513 1323 U Maintenance 5751 5751 0 Total Fixed Costs 55026 56349 1323 U

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