Question

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 9,000 hours of productive capacity in the department: Variable overhead cost: Indirect factory labor $66,600 Power and light 4,230 Indirect materials 29,700 Total variable overhead cost $100,530 Fixed overhead cost: Supervisory salaries $35,190 Depreciation of plant and equipment 22,120 Insurance and property taxes 14,070 Total fixed overhead cost 71,380 Total factory overhead cost $171,910 Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 7,000, 9,000, and 11,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Answer 1

Flexible factory overhead cost budget :-

	7,000 hours	9,000 hours	11,000 hours
Variant overhead cost:
Indirect factory labor cost	7,000 x 7.40 = 51,800	66,600	11,000 x 7.40 = 81,400
Power and light	7,000 x 0.47 = 3,290	4,230	11,000 x 0.47 = 5,170
Indirect material	7,000 x 3.30 = 23,100	29,700	11,000 x 3.30 = 36,300
Total variable cost	78,190	100,530	122,870
Fixed overhead cost:
Supervisory salary	35,190	35,190	35,190
Depreciation	22,120	22,120	22,120
Insurance and property tax	14,070	14,070	14,070
Total fixed overhead	71,380	71,380	71,380
Total Factory overhead	$149,570	$171,910	$194,250

Indirect factory labor cost per hour = 66,600/9,000 = 7.40

Power and light cost per hour = 4,230/9,000 = 0.47

Indirect Material cost per hour = 29,700/9,000 = 3.30