Question

The accountant for Bright Products, Inc., has analyzed the manufacturing overhead costs for the company’s assembly department. The fixed and variable costs follow:

	Variable Cost Element per Hour				Monthly Fixed Cost Element
Indirect labor	$	1.40			$	1,760
Payroll taxes		0.21				140
Indirect materials		0.19				140
Utilities		0.36				240
Depreciation		-				1,160
Taxes and insurance		-				460
Maintenance		0.21				240

Required:

1. Prepare a flexible budget for the department for the month of May 2019, assuming that the expected production is for 2,100 direct labor hours. Show costs for production levels of 90 percent and 110 percent of the expected production level of 2,100 hours.
2. Assume that during the month of May, actual production was 1,500 hours. Actual costs for the month were as follows:

Indirect labor	$	3,814
Payroll taxes		259
Indirect materials		444
Utilities		816
Depreciation		1,160
Taxes and insurance		439
Maintenance		534

Prepare a departmental monthly overhead performance report comparing actual costs with the budget allowance for the total number of hours worked.


Analyze:
If Bright Products, Inc., operates at the expected production level of 2,100 direct labor hours, what total manufacturing overhead cost is projected per direct labor hour?

Prepare a flexible budget for the department for the month of May 2019, assuming that the expected production is for 2,100 direct labor hours. Show costs for production levels of 90 percent and 110 percent of the expected production level of 2,100 hours. (Round your answer to 2 decimal places.)

a.
	BRIGHT PRODUCTS, INC. Flexible Budget for Manufacturing Overhead Month of May 2019 hrs 2,100 hrs hrs 90 % % 110 % Variable costs Total variable costs $0.00 $0.00 $0.00 Fixed costs Total fixed costs $0.00 $0.00 $0.00 Total manufacturing costs $0.00 $0.00 $0.00

b.

Prepare a departmental monthly overhead performance report comparing actual costs with the budget allowance for the total number of hours worked. (Enter all amounts as positive values. Round amounts to the nearest dollar.)

	BRIGHT PRODUCTS, INC. Manufacturing Overhead Budget Performance Report Month of May 2019 Budget for 1,500 hours Actual Over Under Total manufacturing overhead $0 $0 $0 $0

c.

If Bright Products, Inc., operates at the expected production level of 2,100 direct labor hours, what total manufacturing overhead cost is projected per direct labor hour? (Round your answer to 2 decimal places.)

	Manufacturing overhead cost

_________

Answer 1