Problem 24-1A Bumblebee Company estimates that 300,000 direct labor hours will b

ID: 2568124 • Letter: P

Question

Problem 24-1A Bumblebee Company estimates that 300,000 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 ixed Overhead Costs Variabl verhead Costs Supervision Depreciation Insurance Rent Property taxes $120,000 60,000 30,000 45,000 15,000 $270,000 $84,000 Indirect labor 66,000 Indirect materials 24,000 Repairs 18,000 Utilities 12,000 Lubricants $204,000 It is estimated that direct labor hours worked each month will range from 20,000 to 26,000 hours During October, 20,000 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,000, Depreciation $5,500, Insurance $1,975, Rent $1,500, and Property taxes $1,000 Variable overhead costs: Indirect labor $8,970, Indirect materials, $3,700, Repairs $1,960, Utilities $3,250, and Lubricants $1,240

Explanation / Answer

BUMBLEBEE COMPANY

Packaging Company

Monthly Manufacturing Overheads Flexible Budget

For the Year 2017

Labour Hours

20000

22000

24000

26000

Indirect Labour

8000
(20000*0.4)

8800
(22000*0.4)

9600
(24000*0.4)

10400
(26000*0.4)

Indirect Materials

4000
(20000*0.2)

4400
(22000*0.2)

4800
(24000*0.2)

5200
(26000*0.2)

Repairs

2000
(20000*0.1)

2200
(22000*0.1)

2400
(24000*0.1)

2600
(26000*0.1)

Utilities

3000
(20000*0.15)

3300
(22000*0.15)

3600
(24000*0.15)

3900
(26000*0.15)

Lubricants

1000
(20000*0.05)

1100
(22000*0.05)

1200
(24000*0.05)

1300
(26000*0.05)

Total Variable Cost

18000

19800

21600

23400

Supervision

7000

Depreciation

5500

Insurance

2000

Rent

1500

Property Taxes

1000

Total Fixed Costs

17000

Total Costs

35000

36800

38600

40400