Question

Problem 23-1A a-b (Video) Marigold Company estimates that 372,900 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for t Fixed Overhead Costs Supervision $85,440 Depreciation 66,240 Insurance 33,720 Rent 29,280 Property taxes 12,480 $227,160 Variable Overhead Costs Indirect labor $164,076 Indirect materials 74,580 Repairs 74,580 Utilities 93,225 Lubricants 29,832 $436,293 It is estimated that direct labor hours worked each month will range from 24,700 to 31,000 hours. During October, 24,700 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,120, Depreciation $5,520, Insurance $2,785, Rent $2,440, and Property taxes $1,040. Variable overhead costs: Indirect labor $11,888, Indirect materials, $4,570, Repairs $4,870, Utilities $6,475, and Lubricants $2,286. (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 2,100 direct labor hours over the relevant range for the year ending December 31, 2020. (List variable costs before fixed costs.)

(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 2,100 direct labor hours over the relevant range for the year ending December 31, 2020. (List variable costs before fixed costs.)

b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)

^These three additional entries finish off problem three. Thank you!

Answer 1

a)
Marigold Company
Flexible Budget
For October, November & December
	October	November	December	Total
Direct Labor Hours (24,700 + 2,100 = 26,800 + 2,100 = 28,900)	24,700	26,800	28,900	80,400
Variable Costs:
Indirect Labor ($11,888*26,800/24,700); ($11,888*28,900/24,700)	$11,888	$12,899	$13,909	$38,696
Indirect materials ($4,570*26,800/24,700); ($4,570*28,900/24,700)	$4,570	$4,959	$5,347	$14,876
Repairs ($4,870*26,800/24,700); ($4,870*28,900/24,700)	$4,870	$5,284	$5,698	$15,852
Utilities ($6,475*26,800/24,700); ($6,475*28,900/24,700)	$6,475	$7,026	$7,576	$21,077
Lubricants ($2,286*26,800/24,700); ($2,286*28,900/24,700)	$2,286	$2,480	$2,675	$7,441
Total Variable Costs (a)	$30,089	$32,648	$35,205	$97,942
Fixed Costs:
Supervision	$7,120	$7,120	$7,120	$21,360
Depreciation	$5,520	$5,520	$5,520	$16,560
Insurance	$2,785	$2,785	$2,785	$8,355
Rent	$2,440	$2,440	$2,440	$7,320
Property taxes	$1,040	$1,040	$1,040	$3,120
Total Fixed Costs (b)	$18,905	$18,905	$18,905	$56,715
Total Costs (a + b)	$48,994	$51,553	$54,110	$154,657

b)

Marigold Company
Flexible Budget Report
For the month of October
			Difference
	Budgeted (a)	Actual Costs (b)	Favorable Unfavorable Neither Favorable nor Unfavorable (a - b)
Direct Labor Hours (372,900/12 months)	31,075	24,700	-6,375	Unfavorable
Variable Costs:
Indirect Labor ($164,076/12 months)	$13,673	$11,888	$1,785	Favorable
Indirect materials ($74,580/12 months)	$6,215	$4,570	$1,645	Favorable
Repairs ($74,580/12 months)	$6,215	$4,870	$1,345	Favorable
Utilities ($93,225/12 months)	$7,769	$6,475	$1,294	Favorable
Lubricants ($29,832/12 months)	$2,486	$2,286	$200	Favorable
Total Variable Costs (a)	$36,358	$30,089	$6,269	Favorable
Fixed Costs:
Supervision ($85,440/12 months)	$7,120	$7,120	$0	Neither Favorable nor Unfavorable
Depreciation ($66,240/12 months)	$5,520	$5,520	$0	Neither Favorable nor Unfavorable
Insurance ($33,720/12 months)	$2,810	$2,785	$25	Favorable
Rent ($29,280/12 months)	$2,440	$2,440	$0	Neither Favorable nor Unfavorable
Property taxes ($12,480/12 months)	$1,040	$1,040	$0	Neither Favorable nor Unfavorable
Total Fixed Costs (b)	$18,930	$18,905	$25	Favorable