Question

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 18,000 hours of productive capacity in the department:

Variable overhead cost:
Indirect factory labor	$165,600
Power and light	5,400
Indirect materials	54,000
Total variable overhead cost		$225,000
Fixed overhead cost:
Supervisory salaries	$78,750
Depreciation of plant and equipment	49,500
Insurance and property taxes	31,500
Total fixed overhead cost		159,750
Total factory overhead cost		$384,750

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 16,000, 18,000, and 20,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours	16,000	18,000	20,000
Variable overhead cost:
Indirect factory labor	$	$	$
Power and light
Indirect materials
Total variable factory overhead	$	$	$
Fixed factory overhead cost:
Supervisory salaries	$	$	$
Depreciation of plant and equipment
Insurance and property taxes
Total fixed factory overhead	$	$	$
Total factory overhead cost	$	$	$

Answer 1

Answer :-

A flexible factory overhead cost budget for the Press Department for November for 16,000, 18,000, and 20,000 hours of production are as follows :-

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours	16,000	18,000	20,000
Variable overhead cost:
Indirect factory labor	$147,200	$165,600	$184,000
Power and light	$4,800	$5,400	$6,000
Indirect materials	$48,000	$54,000	$60,000
Total variable factory overhead	$200,000	$225,000	$250,000
Fixed factory overhead cost:
Supervisory salaries	$78,750	$78,750	$78,750
Depreciation of plant and equipment	$49,500	$49,500	$49,500
Insurance and property taxes	$31,500	$31,500	$31,500
Total fixed factory overhead	$159,750	$159,750	$159,750
Total factory overhead cost (Total variable factory overhead + Total fixed factory Overhead)	$359,750	$384,750	$409,750

Fixed Overhead cost - Supervisory salaries , Depreciation of plant and equipment , Insurance and property taxes will remain same for 16,000, 18,000, and 20,000 hours of production.

Note 1

In the question it was given that for 18,000 hours of productive capacity in the department -

Indirect factory labor for 18,000 hours = $165,600

Indirect factory labor for each hours = $ 165,600 / 18,000 hours = $9.2

Indirect factory labor for 16,000 hours = Indirect factory labor for each hours × 16,000 hours

Indirect factory labor for 16,000 hours = $9.2 × 16,000 hours = $147,200

Indirect factory labor for 20,000 hours = Indirect factory labor for each hours × 20,000 hours

Indirect factory labor for 20,000 hours = $9.2 × 20,000 hours = $184,000

Power and light for 18,000 hours = $5,400

Power and light for each hours = $5,400 /18,000 hours = $0.3

Power and light for 16,000 hours = Power and light for each hours × 16,000 hours

Power and light for 16,000 hours = $0.3 × 16,000 hours = $4,800

Power and light for 20,000 hours = Power and light for each hours × 20,000 hours

Power and light for 20,000 hours = $0.30 × 20,000 hours = $6,000

Indirect materials for 18,000 hours = $54,000

Indirect materials for each hours = $ 54,000 / 18,000 hours = $3

Indirect materials for 16,000 hours = Indirect material for each hours × 16,000 hours

Indirect materials for 16,000 hours = $3 × 16,000 hours = $48,000

Indirect materials for 20,000 hours = Indirect materials for each hours × 20,000 hours

Indirect materials for 20,000 hours = $3 × 20,000 hours = $60,000