Question

Flexible Overhead Budget Carson Wood Products Company prepared the following factory overhead cost budget for the Press Department for April of the current year, during which it expected to require 9,000 hours of productive capacity in the department: Variable overhead cost: Indirect factory labor $70,200 Power and light 2,610 Indirect materials 25,200 Total variable overhead cost $98,010 Fixed overhead cost: Supervisory salaries $34,300 Depreciation of plant and equipment 21,560 Insurance and property taxes 13,720 Total fixed overhead cost 69,580 Total factory overhead cost $167,590 Assuming that the estimated costs for May are the same as for April, prepare a flexible factory overhead cost budget for the Press Department for May for 7,000, 9,000, and 11,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Answer 1

Carson Wood Products Company
Factory Overhead Cost Budget-Press Department
For the Month Ended May 31, 2014
Direct Labor Hours	7,000	9,000	11,000
Variable overhead cost:
Indirect factory labor	54,600	70,200	85,800
Power and light	2,030	2,610	3,190
Indirect material	19,600	25,200	30,800
Total variable factory overhead	76,230	98,010	1,19,790
Fixed Factory overhead cost
Supervisory salaries	34,300	34,300	34,300
Depreciation of plant and equipment	21,560	21,560	21,560
Insurance and Property taxes	13,720	13,720	13,720
Total fixed factory overhead	69,580	69,580	69,580
Total Factory overhead	1,45,810	1,67,590	1,89,370
Working notes
Indirect factory labor per direct labor hour
70200/9000	7.8
Power & light per direct labor hour
2610/9000	0.29
Indirect material per direct labor hour
25200/9000	2.8

These per direct labor hour rates are used for variable cost for 7,000 and 11,000 hours budget calculation.

The fixed costs will remain same for all the level of activity.