Question

Problem 10-1A Your answer is partially correct. Try again. Bumblebee Company estimates that 402,600 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. Variable Overhead Costs Fixed Overhead Costs Supervision $89,280 Depreciation 73,440 Insurance 26,040 Rent 21,360 Indirect labor Indirect materials Repairs Utilities $169,092 80,520 40,260 60,390 40,260 $390,522 Property taxes 22,440 Lubricants $232,560 It is estimated that direct labor hours worked each month will range from 22,800 to 32,100 hours. During October, 22,800 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,440, Depreciation $6,120, Insurance $2,125, Rent $1,780, and Property taxes $1,870. Variable overhead costs: Indirect labor $10,566, Indirect materials, $4,260, Repairs $2,240, Utilities $3,740, and Lubricants $2,640.

Answer 1

Solution 1:

Computation of standard variable overhead per direct labor hour
Particulars	Budgeted Cost	Budgeted DLH	Overhead Rate
Indirect Labor	$169,092.00	402600	$0.42
Indirect materials	$80,520.00	402600	$0.20
Repairs	$40,260.00	402600	$0.10
Utilities	$60,390.00	402600	$0.15
Lubricants	$40,260.00	402600	$0.10

Bumblebee Company
Packaging Department
Monthly Manufacturing overhead flexible budget
For the year 2017
Particulars	DLH - 225800	DLH - 25900	DLH - 29000	DLH - 32100
Direct labor hours	22800	25900	29000	32100
Variable Costs:
Indirect Labor	$9,576.00	$10,878.00	$12,180.00	$13,482.00
Indirect materials	$4,560.00	$5,180.00	$5,800.00	$6,420.00
Repairs	$2,280.00	$2,590.00	$2,900.00	$3,210.00
Utilities	$3,420.00	$3,885.00	$4,350.00	$4,815.00
Lubricants	$2,280.00	$2,590.00	$2,900.00	$3,210.00
Total variable costs	$22,116.00	$25,123.00	$28,130.00	$31,137.00
Fixed Costs:
Supervision	$7,440.00	$7,440.00	$7,440.00	$7,440.00
Depreciation	$6,120.00	$6,120.00	$6,120.00	$6,120.00
Insurance	$2,170.00	$2,170.00	$2,170.00	$2,170.00
Rent	$1,780.00	$1,780.00	$1,780.00	$1,780.00
Property taxes	$1,870.00	$1,870.00	$1,870.00	$1,870.00
Total Fixed Costs	$19,380.00	$19,380.00	$19,380.00	$19,380.00
Total Costs	$41,496.00	$44,503.00	$47,510.00	$50,517.00

Solution 2:

Bumblebee Company
Packaging Department
Manufacturing overhead flexible budget report
For the month ended October 31, 2017
Particulars	Budget	Actual Cost	Variance	Favorable / Unfavorable / Neither favorable nor unfavorable
Variable Costs:
Indirect Labor	$9,576.00	$10,566.00	$990.00	Unfavorable
Indirect materials	$4,560.00	$4,260.00	$300.00	Favorable
Repairs	$2,280.00	$2,240.00	$40.00	Favorable
Utilities	$3,420.00	$3,740.00	$320.00	Unfavorable
Lubricants	$2,280.00	$2,640.00	$360.00	Unfavorable
Total variable costs	$22,116.00	$23,446.00	$1,330.00	Unfavorable
Fixed Costs:
Supervision	$7,440.00	$7,440.00	$0.00	Neither Favorable nor Unfavorable
Depreciation	$6,120.00	$6,120.00	$0.00	Neither Favorable nor Unfavorable
Insurance	$2,170.00	$2,125.00	$45.00	Favorable
Rent	$1,780.00	$1,780.00	$0.00	Neither Favorable nor Unfavorable
Property taxes	$1,870.00	$1,870.00	$0.00	Neither Favorable nor Unfavorable
Total Fixed Costs	$19,380.00	$19,335.00	$45.00	Favorable
Total Costs	$41,496.00	$42,781.00	$1,285.00	Unfavorable