Budgeted factory overhead costs
Listed below are the budgeted factory overhead costs for 2011 for Valpo Manufacturing Inc. at a projected level of 2,000 units:
Expenses:
Indirect materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,000
Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Straight-line depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Factory property tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000
Factory insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $125,000
Required:
Prepare flexible budgets for factory overhead at the 1,000, 2,000, and 4,000 unit levels. (Hint: You must first decide which of the listed costs should be considered variable and which should be fixed.)
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