Question

Exercise 9-11 (Video)

Atlanta Company is preparing its manufacturing overhead budget for 2020. Relevant data consist of the following.

Units to be produced (by quarters): 10,100, 12,300, 14,500, 16,200.

Direct labor: Time is 1.5 hours per unit.

Variable overhead costs per direct labor hour: indirect materials $0.80; indirect labor $1.30; and maintenance $0.70.

Fixed overhead costs per quarter: supervisory salaries $38,410; depreciation $19,790; and maintenance $14,080.

Prepare the manufacturing overhead budget for the year, showing quarterly data. (Round overhead rate to 2 decimal places, e.g. 1.25. List variable expenses before fixed expense.)

ATLANTA COMPANY Manufacturing Overhead Budget For the Year Ending December 31, 2020December 31, 2020For the Quarter Ending December 31, 2020
	Quarter
		1		2		3		4		Year (Total)
Indirect Materials
Indirect Labor
Maintenance
Total Variable
Fixed Costs
Supervisory Salaries
Depreciation
Maintenance
Total Fixed
Total Manufacturing Overhead
Direct labor hours
Manufacturing overhead rate per direct labor hour

Answer 1

Ans: Manufacturing Overheads Budget for the Year 2020

Expenses	Q1	Q2	Q3	Q4	Total
Units Produced	10,100	12,300	14,500	16,200	53,100
Labour Hours (Units * 1.5 Hr per unit)	15,150	18,450	21,750	24,300	79,650
Overhead Costs
Indirect Materials (0.80 per direct labour hr)	$12,120	$14,760	$17,400	$19,440	$63,720
Indirect Labour (1.30 per direct labour hr)	$19,695	$23,985	$28,275	$31,590	$103,545
Maintenance (0.70 per direct labour hr)	$10,605	$12,915	$15,225	$17,010	$55,755
Total Variable Cost	$42,420	$51,660	$60,900	$68,040	$223,020
Supervisory Salaries	$38,410	$38,410	$38,410	$38,410	$153,640
Depreciation	$19,790	$19,790	$19,790	$19,790	$79,160
Maintenance	$14,080	$14,080	$14,080	$14,080	$56,320
Total Fixed Cost	$72,280	$72,280	$72,280	$72,280	$289,120
Total Manufacturing Overhead (Variable + Fixed)	$114,700	$123,940	$133,180	$140,320	$512,140

Manufacturing Overhead Rate = Total Manufacturing Overhead Cost / Total Direct Labour Hours
per direct labour hour = $512,140 / 79,650 hours
= 6.4299 per hour
=~6.43 per hour

Ans : Manufacturing Overhead Rate per direct labour hour = $6.43 per hour