Problem 10-2A (Part Level Submission) Zelmer Company manufactures tablecloths. S

Question

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. Rate per Direct Labor Hour Annual Fixed Costs Variable costs Indirect labor Indirect materials Factory utilities Factory repairs $47,040 (1,280 12,480 30,000 $0.40 Supervision 0.54 Depreciation .30 Insurance 0.23 Rent The master overhead budget was prepared on the expectation that 482,200 direct labor hours will be worked during the year. In June, 43,100 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variable-per direct labor hour: indirect labor $0.42, indirect materials $0.51, factory utilities $0.33, and factory repairs Fixed: same as budgeted.

Explanation / Answer

Variable cost per hour = (0.40+0.54+0.30+0.23) = 1.47 per labour hour

Fixed cost = 47040+20280+12480+30000 = 109800

d)

The formula is = $109800 + total variable cost of $1.47 per labour hour

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