Bumblebee Company estimates that 306,600 direct labor hours will be worked durin
ID: 2581094 • Letter: B
Question
Bumblebee Company estimates that 306,600 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
$88,560
$141,036
71,400
67,452
27,720
42,924
23,280
45,990
15,120
30,660
$226,080
$328,062
It is estimated that direct labor hours worked each month will range from 29,000 to 37,400 hours.
During October, 29,000 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,380, Depreciation $5,950, Insurance $2,255, Rent $1,940, and Property taxes $1,260.
Variable overhead costs: Indirect labor $14,380, Indirect materials, $6,010, Repairs $3,990, Utilities $4,690, and Lubricants $3,280.
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 2,800 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$88,560
Indirect labor$141,036
Depreciation71,400
Indirect materials67,452
Insurance27,720
Repairs42,924
Rent23,280
Utilities45,990
Property taxes15,120
Lubricants30,660
$226,080
$328,062
Explanation / Answer
1) activity level Direct labor hours 29,000 31800 34600 37400 variable costs Indirect labor 0.46 13340 14628 15916 17204 indirect materials 0.22 6380 6996 7612 8228 repairs 0.14 4060 4452 4844 5236 utilities 0.15 4350 4770 5190 5610 lubricants 0.1 2900 3180 3460 3740 tota variable cost 1.07 31030 34026 37022 40018 Fixed expenses Supervision 7380 7380 7380 7380 Depreciation 5950 5950 5950 5950 insurance 2310 2310 2310 2310 Rent 1940 1940 1940 1940 property taxes 1260 1260 1260 1260 total fixed expenses 18840 18840 18840 18840 total cost 49870 52866 55862 58858 2) budget Actual difference activity level Direct labor hours 29,000 29,000 variable costs Indirect labor 0.46 13340 14,380 1,040 U indirect materials 0.22 6380 6,010 370 F repairs 0.14 4060 3,990 70 F utilities 0.15 4350 4,690 340 U lubricants 0.1 2900 3,280 380 U tota variable cost 1.07 31030 32350 1320 U Fixed expenses Supervision 7380 7380 0 N Depreciation 5950 5950 0 N insurance 2310 2,255 55 F Rent property taxes 1940 1,940 0 N property taxes 1260 1,260 0 N total fixed expenses 17580 17525 55 F total cost 48610 49875 1265 U
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