Question

Flexible Overhead Budget

Wiki Wiki Company has determined that the variable overhead rate is $4 per direct labor hour in the Fabrication Department. The normal production capacity for the Fabrication Department is 14,000 hours for the month. Fixed costs are budgeted at $84,000 for the month.

a. Prepare a monthly factory overhead flexible budget for 13,500, 14,000, and 14,500 hours of production. Enter all amounts as positive numbers.

Wiki Wiki Company
Monthly Factory Overhead Cost Budget-Fabrication Department
Direct labor hours	13,500	14,000	14,500
Variable factory overhead cost	$	$	$
Fixed factory overhead cost
Total factory overhead cost	$	$	$

b. How much overhead would be applied to production if 14,500 hours were used in the department during the month? If required, round your calculations to two decimal places and your final answer to the nearest dollar.
$

Answer 1

a.)	Monthly Factory Overhead Cost Budget-Fabrication Department
	Direct labor hours	13,500	14,000	14,500
	Variable factory overhead cost $	54,000	56,000	58,000
	Fixed factory overhead cost $	84,000	84,000	84,000
	Total factory overhead cost $	138,000	140,000	142,000
b.)	Overhead applied to production
		Amount in $
	Variable Overhead ( 14,500 x 4 )	58,000
	Fixed Overhead ( 84,000 / 14,000 ) x 14,500	87,000
	Overhead applied to production	145,000