P22-1A Prepare flexible manufacturing overhead budget Bumblebee Company estimate
ID: 2569342 • Letter: P
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P22-1A Prepare flexible manufacturing overhead budget 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, shown below, are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $96,000 Indirect labor $126,000 Depreciation 72,000 Indirect materials 90,000 Insurance 30,000 Repairs 69,000 Rent 24,000 Utilities 72,000 Property taxes 18,000 Lubricants 18,000 $240,000 $375,000 It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours. During October 27,000 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: supervision $8,000, depreciation $6,000, insurance $2,460, rent $2,000, and property taxes $1,500. Variable overhead costs: indirect labor $12,432, indirect materials $7,680, repairs $6,100, utilities $6,840, and lubricants $1,920. Instructions (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2017. (b) Prepare a flexible budget report for October. (c ) Comment on management's efficiency in controlling manufacturing overhead costs in October. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2017. BUMBLEBEE COMPANY Packaging Department Monthly Manufacturing Overhead Flexible Budget For the Year 2017 Activity level Direct labor hours 27,000 30,000 33,000 36,000 Variable costs Indirect labor ($0.42) ? ? ? ? Indirect materials ($0.30) ? ? ? ? Repairs ($0.23) ? ? ? ? Utilities ($0.24) ? ? ? ? Lubricants ($0.06) ? ? ? ? Total variable costs ($1.25) ? ? ? ? Fixed costs Supervision ? ? ? ? Depreciation ? ? ? ? Insurance ? ? ? ? Rent ? ? ? ? Property taxes ? ? ? ? Total fixed costs ? ? ? ? Total costs ? ? ? ? (b) Prepare a flexible budget report for October. BUMBLEBEE COMPANY Packaging Department Manufacturing Overhead Flexible Budget Report For the Month Ended October 31, 2017 Difference Budget at Actual Costs Favorable F Direct labor hours 27,000 DLH 27,000 DLH Unfavorable U Variable costs Indirect labor ($0.42) ? Value ? Indirect materials ($0.30) ? Value ? Repairs ($0.23) ? Value ? Utilities ($0.24) ? Value ? Lubricants ($0.06) ? Value ? Total variable costs ($1.25) ? ? ? Fixed costs Supervision Value Value ? F Depreciation Value Value ? U Insurance Value Value ? Rent Value Value ? Property taxes Value Value ? Total fixed costs ? ? ? Total costs ? ? ? P22-1A Prepare flexible manufacturing overhead budget 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, shown below, are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $96,000 Indirect labor $126,000 Depreciation 72,000 Indirect materials 90,000 Insurance 30,000 Repairs 69,000 Rent 24,000 Utilities 72,000 Property taxes 18,000 Lubricants 18,000 $240,000 $375,000 It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours. During October 27,000 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: supervision $8,000, depreciation $6,000, insurance $2,460, rent $2,000, and property taxes $1,500. Variable overhead costs: indirect labor $12,432, indirect materials $7,680, repairs $6,100, utilities $6,840, and lubricants $1,920. Instructions (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2017. (b) Prepare a flexible budget report for October. (c ) Comment on management's efficiency in controlling manufacturing overhead costs in October. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2017. BUMBLEBEE COMPANY Packaging Department Monthly Manufacturing Overhead Flexible Budget For the Year 2017 Activity level Direct labor hours 27,000 30,000 33,000 36,000 Variable costs Indirect labor ($0.42) ? ? ? ? Indirect materials ($0.30) ? ? ? ? Repairs ($0.23) ? ? ? ? Utilities ($0.24) ? ? ? ? Lubricants ($0.06) ? ? ? ? Total variable costs ($1.25) ? ? ? ? Fixed costs Supervision ? ? ? ? Depreciation ? ? ? ? Insurance ? ? ? ? Rent ? ? ? ? Property taxes ? ? ? ? Total fixed costs ? ? ? ? Total costs ? ? ? ? (b) Prepare a flexible budget report for October. BUMBLEBEE COMPANY Packaging Department Manufacturing Overhead Flexible Budget Report For the Month Ended October 31, 2017 Difference Budget at Actual Costs Favorable F Direct labor hours 27,000 DLH 27,000 DLH Unfavorable U Variable costs Indirect labor ($0.42) ? Value ? Indirect materials ($0.30) ? Value ? Repairs ($0.23) ? Value ? Utilities ($0.24) ? Value ? Lubricants ($0.06) ? Value ? Total variable costs ($1.25) ? ? ? Fixed costs Supervision Value Value ? F Depreciation Value Value ? U Insurance Value Value ? Rent Value Value ? Property taxes Value Value ? Total fixed costs ? ? ? Total costs ? ? ?Explanation / Answer
Activity level Direct labor hours 27,000 30,000 33,000 36,000 Variable costs indirect labor (.42) 11340 12600 13860 15120 indirect materials (.30) 8100 9000 9900 10800 repairs (.23) 6210 6900 7590 8280 utilities (.24) 6480 7200 7920 8640 lubricants (0.06) 1620 1800 1980 2160 total variable costs (1.25) 33750 37500 41250 45000 Fixed costs Supervision 8,000 8,000 8,000 8,000 Depreciation 6,000 6,000 6,000 6,000 insurance 2,500 2,500 2,500 2,500 rent 2,000 2,000 2,000 2,000 property taxes 1,500 1,500 1,500 1,500 total fixed costs 20,000 20,000 20,000 20,000 total costs 53,750 57,500 61,250 65,000 b) Flexible budget budget Actual Difference Direct labor hours 27,000 27,000 Variable costs indirect labor (.42) 11340 12,432 1,092 U indirect materials (.30) 8100 7,680 420 F repairs (.23) 6210 6,100 110 F utilities (.24) 6480 6,840 360 U lubricants (0.06) 1620 1,920 300 U total variable costs (1.25) 33750 34,972 1,222 U Fixed costs Supervision 8,000 8,000 0 Depreciation 6,000 6,000 0 insurance 2,500 2,460 40 F rent 2,000 2,000 0 property taxes 1,500 1,500 0 total fixed costs 20,000 19,960 40 F total costs 53,750 54,932 1182 U
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