Bumblebee Company estimates that 366,700 direct labor hours will be worked durin
ID: 2529517 • Letter: B
Question
Bumblebee Company estimates that 366,700 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
$90,000
$168,682
75,240
102,676
31,320
73,340
27,000
55,005
13,200
18,335
$236,760
$418,038
It is estimated that direct labor hours worked each month will range from 29,200 to 39,700 hours.
During October, 29,200 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,500, Depreciation $6,270, Insurance $2,585, Rent $2,250, and Property taxes $1,100.
Variable overhead costs: Indirect labor $14,472, Indirect materials, $7,796, Repairs $5,800, Utilities $4,820, and Lubricants $1,850.
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,500 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$90,000
Indirect labor$168,682
Depreciation75,240
Indirect materials102,676
Insurance31,320
Repairs73,340
Rent27,000
Utilities55,005
Property taxes13,200
Lubricants18,335
$236,760
$418,038
Explanation / Answer
Variable overhead
No. of DLH
Variable cost per direct labor hr V
Indirect labor
$168,682
366700
$0.46
Indirect Material
102676
366700
$0.28
Repairs
73340
366700
$0.20
Utilities
55005
366700
$0.15
Lubricants
18335
366700
$0.05
Monthly Manufacturing Overhead Flexible Budget
Activity Level
Direct Labor Hours D
29200
32700
36200
39700
Variable Cost D*V
Indirect labor
$13,432
$15,042.00
$16,652.00
$18,262.00
Indirect Material
$8,176
$9,156.00
$10,136.00
$11,116.00
Repairs
$5,840
$6,540.00
$7,240.00
$7,940.00
Utilities
$4,380
$4,905.00
$5,430.00
$5,955.00
Lubricants
$1,460
$1,635.00
$1,810.00
$1,985.00
Total Variable cost X
$33,288
$37,278
$41,268
$45,258
Fixed Cost
Supervision (90000/12)
7500
7500
7500
7500
Depreciation (75240/12)
6270
6270
6270
6270
Insurance (31320/12)
2610
2610
2610
2610
Rent (27000/12)
2250
2250
2250
2250
Property Taxes (13200/12)
1100
1100
1100
1100
Total Fixed cost F
19730
19730
19730
19730
Total Cost X+F
$53,018
$57,008
$60,998
$64,988
Monthly Manufacturing Overhead Flexible Budget Report
Budget
Actual
Variance
Variable Cost
Indirect labor
$13,432
14472
$1,040
Unfavorable
Indirect Material
$8,176
7796
$380
Favorable
Repairs
$5,840
5800
$40
Favorable
Utilities
$4,380
4820
$440
Unfavorable
Lubricants
$1,460
1850
$390
Unfavorable
Total Variable cost X
$33,288
$34,738
$1,450
Unfavorable
Fixed Cost
Supervision (90000/12)
7500
7500
$0
Neither F nor U
Depreciation (75240/12)
6270
6270
$0
Neither F nor U
Insurance (31320/12)
2610
2585
$25
Favorable
Rent (27000/12)
2250
2250
$0
Neither F nor U
Property Taxes (13200/12)
1100
1100
$0
Neither F nor U
Total Fixed cost F
19730
19705
$25
Favorable
Total Cost X+F
$53,018
$54,443
$1,425
Unfavorable
Variable overhead
No. of DLH
Variable cost per direct labor hr V
Indirect labor
$168,682
366700
$0.46
Indirect Material
102676
366700
$0.28
Repairs
73340
366700
$0.20
Utilities
55005
366700
$0.15
Lubricants
18335
366700
$0.05
Monthly Manufacturing Overhead Flexible Budget
Activity Level
Direct Labor Hours D
29200
32700
36200
39700
Variable Cost D*V
Indirect labor
$13,432
$15,042.00
$16,652.00
$18,262.00
Indirect Material
$8,176
$9,156.00
$10,136.00
$11,116.00
Repairs
$5,840
$6,540.00
$7,240.00
$7,940.00
Utilities
$4,380
$4,905.00
$5,430.00
$5,955.00
Lubricants
$1,460
$1,635.00
$1,810.00
$1,985.00
Total Variable cost X
$33,288
$37,278
$41,268
$45,258
Fixed Cost
Supervision (90000/12)
7500
7500
7500
7500
Depreciation (75240/12)
6270
6270
6270
6270
Insurance (31320/12)
2610
2610
2610
2610
Rent (27000/12)
2250
2250
2250
2250
Property Taxes (13200/12)
1100
1100
1100
1100
Total Fixed cost F
19730
19730
19730
19730
Total Cost X+F
$53,018
$57,008
$60,998
$64,988
Monthly Manufacturing Overhead Flexible Budget Report
Budget
Actual
Variance
Variable Cost
Indirect labor
$13,432
14472
$1,040
Unfavorable
Indirect Material
$8,176
7796
$380
Favorable
Repairs
$5,840
5800
$40
Favorable
Utilities
$4,380
4820
$440
Unfavorable
Lubricants
$1,460
1850
$390
Unfavorable
Total Variable cost X
$33,288
$34,738
$1,450
Unfavorable
Fixed Cost
Supervision (90000/12)
7500
7500
$0
Neither F nor U
Depreciation (75240/12)
6270
6270
$0
Neither F nor U
Insurance (31320/12)
2610
2585
$25
Favorable
Rent (27000/12)
2250
2250
$0
Neither F nor U
Property Taxes (13200/12)
1100
1100
$0
Neither F nor U
Total Fixed cost F
19730
19705
$25
Favorable
Total Cost X+F
$53,018
$54,443
$1,425
Unfavorable
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