Question 1 Bumblebee Company estimates that 362,200 direct labor hours will be w

Question

Question 1 Bumblebee Company estimates that 362,200 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 Supervision Depreciation Insurance Rent Property taxes $93,840 Indirect labor 71,520 Indirect materials 24,360 Repairs 19,920 Utilities 15,960 Lubricants $159,368 94,172 50,708 54,330 25,354 $383,932 $225,600 It is estimated that direct labor hours worked each month will range from 28,000 to 38,500 hours. During October, 28,000 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,820, Depreciation $5,960, Insurance $1,985, Rent $1,660, and Property taxes $1,330 Variable overhead costs: Indirect labor13,310, Indirect materials, $6,940, Repairs $3,880, Utilities $4,560, and Lubricants $2,360 (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 varlable costs before fixed costs.)

Explanation / Answer

1) activity level Direct labor hours 28,000 31,500 35,000 38,500 variable costs Indirect labor 0.44 12320 13860 15400 16940 indirect materials 0.26 7280 8190 9100 10010 repairs 0.14 3920 4410 4900 5390 utilities 0.15 4200 4725 5250 5775 lubricants 0.07 1960 2205 2450 2695 tota variable cost 1.06 29680 33390 37100 40810 Fixed expenses Supervision 7820 7820 7820 7820 Depreciation 5960 5960 5960 5960 insurance 2030 2030 2030 2030 Rent 1660 1660 1660 1660 property taxes 1330 1330 1330 1330 total fixed expenses 18800 18800 18800 18800 total cost 48480 52190 55900 59610 2) budget Actual difference activity level Direct labor hours 28,000 28,000 variable costs Indirect labor 0.44 12,320 13,310 990 U indirect materials 0.26 7280 6,940 340 F repairs 0.14 3920 3,880 40 F utilities 0.15 4200 4,560 360 U lubricants 0.07 1960 2,360 400 U tota variable cost 1.06 29680 31050 1370 U Fixed expenses Supervision 7820 7,820 0 N Depreciation 5960 5,960 0 N insurance 2030 1,985 45 F Rent property taxes 1660 1,660 0 N property taxes 1330 1,330 0 N total fixed expenses 18800 18,755 45 F total cost 48480 49805 1325 U

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