Question

Bumblebee Company estimates that 379,500 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 $94,440 Indirect labor $174,570 Depreciation 73,320 Indirect materials 75,900 25,560 Repairs Insurance 53,130 Rent 21,120 Utilities 94,875 Property taxes 20,880 Lubricants 37,950 $436,425 $235,320 It is estimated that direct labor hours worked each month will range from 24,900 to 36,900 hours. During October, 24,900 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,870, Depreciation $6,110, Insurance $2,095, Rent $1,760, and Property taxes $1,740. Variable overhead costs: Indirect labor $12,544, Indirect materials, $4,500, Repairs $3,406, Utilities $6,545, and Lubricants $2,740. (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 4,000 direct labor hours over the relevant range for the year ending December 31, 2017. (List variable costs before fixed costs.) Packaging Department Monthly Manufacturing Overhead Flexible Budget For the Year 2017 Ad Play GOog $ $ 440 For the month Endea October 31, 2017 Difference Favorable Unfavorable Neither Favorable Budget Actual Costs nor Unfavorable

Answer 1

Bumblebee Company Answer Monthly Manufacturing Overhead Flexible Budget For the year ended December 31, 2017 Level of activity Direct labor hours 24,900 28,900 32,900 36,900 Variable costs Indirect labor Indirect materials Repairs Utilities |Lubricants $11,454 $13,294 $15,134 $16,974 $5,780 $6,580 $4,046 $4,606 $7,225 $8,225 $2,890 $3,290 (@$0.46 per DLH) (@$0.20 per DLH) (@$0.14 per DLH) (@$0.25 per DLH) (@$0.10 per DLH) $4,980 $3,486 $6,225 $2,490 $7,380 $5,166 $9,225 $3,690 $28,635 $33,235 $37,835|$42,435 Total variable costs (A) Fixed costs Supervision Depreciation Insurance $7,870 $6,110 $2,130 $1,760 $1,740 $7,870 $6,110 $2,130 $1,760 $1,740 $7,870 $6,110 $2,130 $1,760 $1,740 $7,870 $6,110 $2,130 $1,760 $1,740 Rent Property taxes $19,610 $19,610$19,610 $19,610 Total fixed costs (B) Total Costs [(A)+ (B)] $48,245 $52,845 $57,445 $62,045

Explanations Calculation of Variable Cost per Unit Variable cost per unit Total variable cost /Total estimated direct labor hours Indirect labor cost per unit $174,570/379,500 DLHS $0.46 per DLH Indirect materials per unit $75,900/ 379,500 DLHs $0.20 per DLH Repairs per unit = $53,130/379,500 DLHS $0.14 per DLH Utilities per unit $94,875 / 379,500 DLHs $0.25 per DLH Lubricants per unit $37,950 /379,500 DLHS $0.10 per DLH = Calculation of Fixed Cost per Month Monthly fixed cost = Yearly fixed cost/12 months Monthly supervision $94,440/12 months $7,870 Monthly depreciation $73,320/12 months $6,110 Monthly insurance $25,560 /12 months $2,130 Monthly rent $21,120 / 12 months $1,760 Monthly property taxes $20,880/12 months $1,740 -