Question

Flexible Budget Application
The polishing department of Taylor Manufacturing Company operated during April 2016 with the following manufacturing overhead cost budget based on 5,000 hours of monthly productive capacity:

Taylor Manufacturing Company Polishing Department Overhead Budget (5,000 Hours) For the Month of April 2016
Variable costs:
Factory supplies				$100,000
Indirect labor				152,000
Utilities				68,000
Patent royalties on secret process				296,000
Total variable overhead					$616,000
Fixed costs:
Supervisory salaries				160,000
Depreciation on factory equipment				144,000
Factory taxes				48,000
Factory insurance				32,000
Utilities (base charge)				80,000
Total fixed overhead					464,000
Total manufacturing overhead					$1,080,000

The polishing department was operated for 4,500 hours during April and incurred the following manufacturing overhead costs:

Factory supplies				$97,470
Indirect labor				136,110
Utilities (usage factor)				82,800
Utilities (base factor)				96,000
Patent royalties				280,366
Supervisory salaries				167,000
Depreciation on factory equipment				144,000
Factory taxes				55,000
Factory insurance				32,000
Total manufacturing overhead incurred				$1,090,746

Using a flexible budgeting approach, prepare a performance report for the polishing department for April 2016, comparing actual overhead costs with budgeted overhead costs for 4,500 hours. Separate overhead costs into variable and fixed components and show the amounts of any variances between actual and budgeted amounts.

Do not use negative signs with your answers below.
Do not round until your final answer. Round answers to nearest whole number, if applicable.
Select either U for Unfavorable or F for Favorable using the drop down box next to each of your variance answers.

Taylor Manufacturing Company Polishing Department Performance Report - Manufacturing Overhead For the Month Ended April 30, 2016
			Actual Costs	Budget (4,500 hours)	Variances
Variable costs:
Factory supplies			Answer	Answer	Answer	AnswerFU
Indirect labor			Answer	Answer	Answer	AnswerFU
Utilities			Answer	Answer	Answer	AnswerFU
Patent royalties			Answer	Answer	Answer	AnswerFU
Total variable overhead			Answer	Answer	Answer	AnswerFU
Fixed costs:
Supervisory salaries			Answer	Answer	Answer	AnswerFU
Depreciation on equipment			Answer	Answer	Answer
Factory taxes			Answer	Answer	Answer	AnswerFU
Factory insurance			Answer	Answer	Answer
Utilities			Answer	Answer	Answer	AnswerFU
Total fixed overhead			Answer	Answer	Answer	AnswerFU
Total overhead costs			Answer	Answer	Answer	AnswerFU

Answer 1

			Polishing department
			Performance report
				Actual costs	Budget	Variances
					(4500 hours)
	Variable costs:
	Factory supplies			97470	90000	7470	U
	Indirect labor			136110	136800	690	F
	Utilities			82800	61200	21600	U
	Patent royalties			280366	266400	13966	U
	Total variable overhead			596746	554400	42346	U
	Fixed costs:
	Supervisory salaries			167000	160000	7000	U
	Depreciation on equipment			144000	144000	0
	Factory taxes			55000	48000	7000	U
	Factory insurance			32000	32000	0
	Utilities			96000	80000	16000	U
	Total fixed overhead			494000	464000	30000	U
	Total overhead costs			1090746	1018400	72346	U
	Variances=Budget-Actual
	If the answer is positive,variance is favorable.Otherwise unfavorable.
	Factory supplies:
	Standard cost per hour=100000/5000=$ 20 per hour
	Budgeted cost for 4500 hours=4500*20=$ 90000
	Indirect labor:
	Standard cost per hour=152000/5000=$ 30.4 per hour
	Budgeted cost for 4500 hours=4500*30.4=$ 136800
	Utilities:
	Standard cost per hour=68000/5000=$ 13.6 per hour
	Budgeted cost for 4500 hours=4500*13.6=$ 61200
	Patent royalties
	Standard cost per hour=296000/5000=$ 59.2 per hour
	Budgeted cost for 4500 hours=4500*59.2=$ 266400