tlanta Company is preparing its manufacturing overhead budget for 2017. Relevant
ID: 2511249 • Letter: T
Question
tlanta Company is preparing its manufacturing overhead budget for 2017. Relevant data consist of the following. Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000. Direct labor: Time is 1.5 hours per unit. Variable overhead costs per direct labor hour: indirect materials $0.80; indirect labor $1.20; and maintenance $0.50. Fixed overhead costs per quarter: supervisory salaries $35,000; depreciation $15,000; and maintenance $12,000. Prepare the manufacturing overhead budget for the year, showing quarterly data
Explanation / Answer
Solution:
Quarter - 1
Quarter - 2
Quarter - 3
Quarter - 4
Year
Variable costs
Indirect materials ($0.80/hour)
12,000
14,400
16,800
19,200
62,400
Indirect labor ($1.20/hour)
18,000
21,600
25,200
28,800
93,600
Maintenance ($0.50/hour)
7,500
9,000
10,500
12,000
39,000
Total variable
37,500
45,000
52,500
60,000
195,000
Fixed costs
Supervisory salaries
35,000
35,000
35,000
35,000
140,000
Depreciation
15,000
15,000
15,000
15,000
60,000
Maintenance
12,000
12,000
12,000
12,000
48,000
Total fixed
62,000
62,000
62,000
62,000
248,000
Total manufacturing overhead
99,500
107,000
114,500
122,000
443,000
Units to be produced
10,000
12,000
14,000
16,000
52,000
Direct labor hours per unit
1.5
1.5
1.5
1.5
1.5
Total direct labor hours
15,000
18,000
21,000
24,000
78,000
Manufacturing overhead rate per direct labor hour = 5.68
Quarter - 1
Quarter - 2
Quarter - 3
Quarter - 4
Year
Variable costs
Indirect materials ($0.80/hour)
12,000
14,400
16,800
19,200
62,400
Indirect labor ($1.20/hour)
18,000
21,600
25,200
28,800
93,600
Maintenance ($0.50/hour)
7,500
9,000
10,500
12,000
39,000
Total variable
37,500
45,000
52,500
60,000
195,000
Fixed costs
Supervisory salaries
35,000
35,000
35,000
35,000
140,000
Depreciation
15,000
15,000
15,000
15,000
60,000
Maintenance
12,000
12,000
12,000
12,000
48,000
Total fixed
62,000
62,000
62,000
62,000
248,000
Total manufacturing overhead
99,500
107,000
114,500
122,000
443,000
Units to be produced
10,000
12,000
14,000
16,000
52,000
Direct labor hours per unit
1.5
1.5
1.5
1.5
1.5
Total direct labor hours
15,000
18,000
21,000
24,000
78,000
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