Atlanta Company is preparing its manufacturing overhead budget for 2017. Relevan

Question

Atlanta Company is preparing its manufacturing overhead budget for 2017. Relevant data consist of the following Units to be produced (by quarters): 10,200, 12,100, 15,000, 16,700 Direct labor: Time is 1.6 hours per unit. Variable overhead costs per direct labor hour: indirect materials $0.90; indirect labor $1.30; and maintenance $0.60 Fixed overhead costs per quarter: supervisory salaries $36,280; depreciation $18,600; and maintenance $15,000. Prepare the manufacturing overhead budget for the year, showing quarterly data. ATLANTA COMPANY Manufacturing Overheed Budget For the Year Ending December 31, 2017 Quarter Variable Costs Indirect Materials Indirect Labor Maintenance 10200 12100 15000 16700 $ Total Variable Fixed Costs Depreciation Maintenance Total Fixed Direct labor hours Manufacturing overhead rate per direct labor hour

Explanation / Answer

ATLANTA COMPANY Manufacturing Overhead Budget For the year ending December 31,2017 Quarter 1 2 3 4 Year Variable Cost Indirect Materials $0.90/ Hour $          14,688 $          17,424 $          21,600 $          24,048 $          77,760 Indirect Labor $1.30/ Hour              21,216              25,168              31,200              34,736            112,320 Maintenance $0.60 /Hour                 9,792              11,616              14,400              16,032              51,840       Total Variable              45,696              54,208              67,200              74,816            241,920 Fixed Costs Supervisory Salaries              36,280              36,280              36,280              36,280            145,120 Depreciation              18,600              18,600              18,600              18,600              74,400 Maintenance              15,000              15,000              15,000              15,000              60,000        Total Fixed              69,880              69,880              69,880              69,880            279,520 Total Manufacturing Overhead $        115,576 $        124,088 $        137,080 $        144,696 $        521,440 Units to be produced              10,200              12,100              15,000              16,700              54,000 Direct Labor Hours per Unit                     1.6                     1.6                     1.6                     1.6                     1.6 Total direct labor hours              16,320              19,360              24,000              26,720              86,400 Manufacturing overhead rate per direct labor hour (521,440 / 86400 = 6.04) $               6.04 Note: 10200*1.6*0.9 = 14688

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