Question

Campbell Soup Company estimates that 240,000 direct labor hours will be worked during 2018 in the Mixing Department. On this basis, the following budgeted manufacturing overhead data are computed:

Variable Overhead Costs		Fixed Overhead Costs
Indirect labor	$96,000	Supervision	$73,200
Indirect materials	72,000	Depreciation	62,280
Repairs	21,600	Insurance	51,900
Utilities	7,200	Rent	20,760
	$196,800		$208,140

It is estimated that direct labor hours worked each month will range from 5,000 to 20,000 hours. During June, 15,000 direct labor hours were worked and the following overhead costs were incurred (shown in the chart below):

Variable Overhead Costs		Fixed Overhead Costs
Indirect labor	$7,500	Supervision	$6,100
Indirect materials	4,100	Depreciation	5,230
Repairs	1,375	Insurance	4,325
Utilities	420	Rent	1,730
	$13,395		$17.385

Instructions:

1. Prepare a monthly flexible manufacturing overhead budget for the Mixing Department for each increment of 5,000 direct labor hours over the relevant range for the year ending December 31, 2018.
2. Prepare a manufacturing overhead budget report for June.

Answer 1

a.

Campbell Soup Company
Mixing Department
Monthly Manufacturing Overhead Flexible Budget
For the Year 2018
Direct labor hours	5000	10000	15000	20000
Variable overhead costs:
Indirect labor	2000	4000	6000	8000
Indirect materials	1500	3000	4500	6000
Repairs	450	900	1350	1800
Utilities	150	300	450	600
Total variable overhead costs	4100	8200	12300	16400
Fixed overhead costs:
Supervision	6100	6100	6100	6100
Depreciation	5190	5190	5190	5190
Insurance	4325	4325	4325	4325
Rent	1730	1730	1730	1730
Total fixed overhead costs	17345	17345	17345	17345
Total overhead costs $	21445	25545	29645	33745

b.

Campbell Soup Company
Mixing Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended June 30, 2018
	Budget	Actual	Difference
Direct labor hours	15000	15000
Variable overhead costs:
Indirect labor	6000	7500	1500	U
Indirect materials	4500	4100	400	F
Repairs	1350	1375	25	U
Utilities	450	420	30	F
Total variable overhead costs	12300	13395	1095	U
Fixed overhead costs:
Supervision	6100	6100	0	None
Depreciation	5190	5230	40	U
Insurance	4325	4325	0	None
Rent	1730	1730	0	None
Total fixed overhead costs	17345	17385	40	U
Total overhead costs $	29645	30780	1135	U