Bumblebee Company estimates that 385,800 direct labor hours will be worked durin
ID: 2590672 • Letter: B
Question
Bumblebee Company estimates that 385,800 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
Supervision $91,080
Depreciation 74,520
Insurance 24,840
Rent 22,560
Property taxes 17,880
Total $230,880
Variable Overhead Costs
Indirect labor $185,184
Indirect materials 100,308
Repairs 61,728
Utilities 57,870
Lubricants 30,864
Total: $435,954
It is estimated that direct labor hours worked each month will range from 28,700 to 39,200 hours. During October, 28,700 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,590, Depreciation $6,210, Insurance $2,015, Rent $1,880, and Property taxes $1,490. Variable overhead costs: Indirect labor $14,756, Indirect materials, $7,042, Repairs $4,532, Utilities $4,725, and Lubricants $2,596.
(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.)
(b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)
Explanation / Answer
1) activity level Direct labor hours 28,700 32,200 35,700 39,200 variable costs Indirect labor 0.48 13776 15456 17136 18816 indirect materials 0.26 7462 8372 9282 10192 repairs 0.16 4592 5152 5712 6272 utilities 0.15 4305 4830 5355 5880 lubricants 0.08 2296 2576 2856 3136 tota variable cost 1.13 32431 36386 40341 44296 Fixed expenses Supervision 7590 7590 7590 7590 Depreciation 6210 6210 6210 6210 insurance 2070 2070 2070 2070 Rent 1880 1880 1,880 1880 property taxes 1490 1490 1,490 1490 total fixed expenses 19240 19240 19240 19240 total cost 51671 55626 59581 63536 2) budget Actual difference activity level Direct labor hours 28,700 28,700 variable costs Indirect labor 0.48 13,776 14,756 980 U indirect materials 0.26 7462 7,042 420 F repairs 0.16 4592 4,532 60 F utilities 0.15 4305 4,725 420 U lubricants 0.08 2296 2,596 300 U tota variable cost 1.13 32431 33651 1220 U Fixed expenses Supervision 7590 7,590 0 N Depreciation 6210 6,210 0 N insurance 2070 2,015 55 F Rent property taxes 1880 1,880 0 N property taxes 1490 1,490 0 N total fixed expenses 19240 19,185 55 F total cost 51671 52836 1165 U
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