Question

CALCULATOR PRINTER VERSION BACK Problem 10-2A a-b, d (Part Level Submission) (Video) Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2020. Th following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours. Variable costs Indirect labor Indirect materials Factory utilities Factory repairs Rate per Direct Labor Hour $0.43 0.55 0.30 0.24 Annual Fixed Costs Supervision $47,160 Depreciation 17,520 Insurance 16,560 Rent 28,560 The master overhead budget was prepared on the expectation that 477,300 direct labor hours will be worked during the year. In June, 40,800 direct labor hours were worked At that level of activity, actual costs were as shown below Variable-per direct labor hour: Indirect labor $0.45, Indirect materials $0.54, factory utilities 50.34, and factory repairs $0.28 Fixed: same as budgeted. (a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2020, assuming production levels range from 36.400 to 54,400 direct labor hours. Use increments of 6.000 direct labor hours (List Variable costs before fixed costs.) ZELHER COMPANY Monthly Manufacturing Overtad Flexible budget nh For the Year 2020

Answer 1

Solution a:

Zelmer Company
Ironing Department
Monthly Manufacturing overhead flexible budget
For the year 2020
Particulars	DLH - 36400	DLH - 42400	DLH - 48400	DLH - 54400
Direct labor hours	36400	42400	48400	54400
Variable Costs:
Indirect Labor	$15,652.00	$18,232.00	$20,812.00	$23,392.00
Indirect materials	$20,020.00	$23,320.00	$26,620.00	$29,920.00
Factory utilities	$10,920.00	$12,720.00	$14,520.00	$16,320.00
Factory repairs	$8,736.00	$10,176.00	$11,616.00	$13,056.00
Total variable costs	$55,328.00	$64,448.00	$73,568.00	$82,688.00
Fixed Costs:
Supervision	$3,930.00	$3,930.00	$3,930.00	$3,930.00
Depreciation	$1,460.00	$1,460.00	$1,460.00	$1,460.00
Insurance	$1,380.00	$1,380.00	$1,380.00	$1,380.00
Rent	$2,380.00	$2,380.00	$2,380.00	$2,380.00
Total Fixed Costs	$9,150.00	$9,150.00	$9,150.00	$9,150.00
Total Costs	$64,478.00	$73,598.00	$82,718.00	$91,838.00

Solution b:

Zelmer Company
Ironing Department
Manufacturing overhead flexible budget report
For the month ended June 30, 2020
Particulars	Budget	Actual Cost	Variance	Favorable / Unfavorable / Neither favorable nor unfavorable
Variable Costs:
Indirect Labor	$17,544.00	$18,360.00	$816.00	Unfavorable
Indirect materials	$22,440.00	$22,032.00	$408.00	Favorable
Factory utilities	$12,240.00	$13,872.00	$1,632.00	Unfavorable
Factory repairs	$9,792.00	$11,424.00	$1,632.00	Unfavorable
Total variable costs	$62,016.00	$65,688.00	$3,672.00	Unfavorable
Fixed Costs:
Supervision	$3,930.00	$3,930.00	$0.00	Neither Favorable nor Unfavorable
Depreciation	$1,460.00	$1,460.00	$0.00	Neither Favorable nor Unfavorable
Insurance	$1,380.00	$1,380.00	$0.00	Neither Favorable nor Unfavorable
Rent	$2,380.00	$2,380.00	$0.00	Neither Favorable nor Unfavorable
Total Fixed Costs	$9,150.00	$9,150.00	$0.00	Neither Favorable nor Unfavorable
Total Costs	$71,166.00	$74,838.00	$3,672.00	Unfavorable