Question

Problem 22-1A

Bumblebee Company estimates that 370,000 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.


Problem 22-1A Bumblebee Company estimates that 370,000 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. Fixed Overhead Costs Supervision Depreciation Insurance Rent Property taxes $85,440 76,200 28,320 20,400 15,840 $226,200 Variable Overhead Costs Indirect labor $170,200 Indirect materials 96,200 Repairs 51,800 Utilities 55,500 Lubricants 25,900 $399,600 It is estimated that direct labor hours worked each month will range from 28,000 to 34,900 hours. During October, 28,000 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,120, Depreciation $6,350, Insurance $2,310, Rent $1,700, and Property taxes $1,320. Variable overhead costs: Indirect labor $13,860, Indirect materials, $6,850, Repairs $3,870, Utilities $4,600, and Lubricants $2,360. (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 2,300 direct labor hours over the relevant range for the year ending December 31, 2017. (List variable costs before fixed costs.) BUMBLEBEE COMPANY Packaging Department Monthly Manufacturing Overhead Flexible Budget For the Year 2017

Answer 1

1)
	activity level
	Direct labor hours				28,000	30,300	32,600	34,900
	variable costs
	Indirect labor		0.46		12880	13938	14996	16054
	indirect materials		0.26		7280	7878	8476	9074
	repairs		0.14		3920	4242	4564	4886
	utilities		0.15		4200	4545	4890	5235
	lubricants		0.07		1960	2121	2282	2443
	tota variable cost		1.08		30240	32724	35208	37692
	Fixed expenses
	Supervision				7120	7120	7120	7120
	Depreciation				6350	6350	6350	6350
	insurance				2360	2360	2360	2360
	Rent				1700	1700	1700	1700
	property taxes				1320	1320	1320	1320
	total fixed expenses				18850	18850	18850	18850
	total cost				49090	51574	54058	56542
2)					budget	Actual	difference
	activity level
	Direct labor hours				28,000	28,000
	variable costs
	Indirect labor		0.46		12,880	13,860	980	U
	indirect materials		0.26		7280	6,850	430	F
	repairs		0.14		3920	3,870	50	F
	utilities		0.15		4200	4,600	400	U
	lubricants		0.07		1960	2,360	400	U
	tota variable cost		1.08		30240	31540	1300	U
	Fixed expenses
	Supervision				7120	7,120	0	N
	Depreciation				6350	6,350	0	N
	insurance				2360	2,310	50	F
	Rent property taxes				1700	1,700	0	N
	property taxes				1320	1,320	0	N
	total fixed expenses				18850	18,800	50	F
	total cost				49090	50340	1250	U