Bumblebee Company estimates that 342,200 direct labor hours will be worked during the coming year, 2017,...

Bumblebee Company estimates that 342,200 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 Variable Overhead Costs Supervision $94,200 Indirect labor $143,724 Depreciation 77,280 Indirect materials 88,972 Insurance 30,960 Repairs 47,908 Rent 24,960 Utilities 51,330 Property taxes 23,160 Lubricants 17,110 $250,560 $349,044 It is estimated that direct labor hours worked each month will range from 22,700 to 32,600 hours. During October, 22,700 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,850, Depreciation $6,440, Insurance $2,535, Rent $2,080, and Property taxes $1,930. Variable overhead costs: Indirect labor $10,574, Indirect materials, $5,472, Repairs $3,138, Utilities $3,735, and Lubricants $1,555. (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,300 direct labor hours over the relevant range for the year ending December 31, 2017. (b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)

Expert Solution

Flexible Budget (for 22700 hours)
Labour hours			22700
Variable cost:
Indirect labour	(143724/342200*22700)		9534
Indirect material	(88972/342200*22700)		5902
Repairs	(47908/342200*22700)		3178
Utilities	(51330/342200*22700)		3405
Lubricants	(17110/342200*22700)		1135
Total variable cost			23154

Fixed cost:
Supervision	(94200*1/12)		7850
Depreciation	(77280*1/12)		6440
Insurance	(30960*1/12)		2580
Rent	(24960*1/12)		2080
Property tax	(23160*1/12)		1930
Total Fixed cost			20880
Total cost			44034


Flexible Budget Report
		Actual	Spending variance		Flexible
Labour hours		22700			22700
Variable cost:
Indirect labour		10574	1040	U	9534
Indirect material		5472	430	F	5902
Repairs		3138	40	F	3178
Utilities		3735	330	U	3405
Lubricants		1555	420	U	1135
Total variable cost		24474	1320	U	23154
			0
Fixed cost:			0
Supervision		7850	0		7850
Depreciation		6440	0		6440
Insurance		2535	45	F	2580
Rent		2,080	0		2080
Property tax		1,930	0		1930
Total Fixed cost		20835	45	F	20880
Total cost		45309	1275	U	44034

ekkarill92 answered 2 years ago

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