Question

1.

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 10,000 hours of productive capacity in the department:

Variable overhead cost:
Indirect factory labor	$76,000
Power and light	4,000
Indirect materials	33,000
Total variable overhead cost		$113,000
Fixed overhead cost:
Supervisory salaries	$39,550
Depreciation of plant and equipment	24,860
Insurance and property taxes	15,820
Total fixed overhead cost		80,230
Total factory overhead cost		$193,230

Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 8,000, 10,000, and 12,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

2.

The following data relate to factory overhead cost for the production of 6,000 computers:

Actual:	Variable factory overhead	$163,000
	Fixed factory overhead	70,000
Standard:	6,000 hrs. at $35	210,000

If productive capacity of 100% was 10,000 hours and the total factory overhead cost budgeted at the level of 6,000 standard hours was $238,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $7 per hour. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Answer 1

Ans:-

Given information is about Leno manufacturing company cost budget for press department for the October current year at 10,000 hours of productive capacity.

Only variable cost will vary from each stage of production process but fixed cost will change as per change in production at zero level production also fixed cost will exist.

We are required to calculate flixable budget for the productive hours 8,000, 10,000 and 12,000

Calculation of flixable budget

Leno Manufacturing Company

FactoryOverhead Cost budget-press Department

For the month ended November 30

Direct labour hours	8,000	10,000	12,000
Variable factory overhead
Indirect factory labour	$60,800 (76,000*8,000/10,000)	$76,000	$91,200 (76,000*12,000/10,000)
Power and light	$3,200 (4,000*8,000/10,000)	$4,000	$4,800 (4,000*12,000/10,000)
Indirect material	$26,400 (33,000*8,000/10,,000)	$33,000	$39,600 (33,000*12,000/10,000)
Fixed factory overhead cost
Supervisor salary	$39,550	$39,550	$39,550
Depreciation on plant and equipment	$24,860	$24,860	$24,860
Insurance and property taxes	$15,820	$15,820	$15,820
Value of Flixable budget	$170,630	$193,230	$215,830