Question

1. Flexible Overhead Budget

   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 14,000 hours of productive capacity in the department:

   Variable overhead cost:
   Indirect factory labor	$133,000
   Power and light	6,440
   Indirect materials	30,800
   Total variable overhead cost		$170,240
   Fixed overhead cost:
   Supervisory salaries	$59,580
   Depreciation of plant and equipment	37,450
   Insurance and property taxes	23,830
   Total fixed overhead cost		120,860
   Total factory overhead cost		$291,100

   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 12,000, 14,000, and 16,000 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	12,000	14,000	16,000
   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

Ans.	Leno Manufacturing Company
	Factory Overhead Cost Budget-Press Department
	For the Month Ended November 30
	Direct labor hours	12,000	14,000	16,000
	Variable overhead costs:
	Indirect factory wages	$114,000	$133,000	$152,000
	Power and light	$5,520	$6,440	$7,360
	Indirect materials	$26,400	$30,800	$35,200
	Total variable factory overhead (a)	$145,920	$170,240	$194,560
	Fixed factory overhead costs:
	Supervisory salaries	$59,580	$59,580	$59,580
	Depreciation of plant and equipment	$37,450	$37,450	$37,450
	Insurance and property taxes	$23,830	$23,830	$23,830
	Total fixed factory overhead (b)	$120,860	$120,860	$120,860
	Total factory overhead Cost (a + b)	$266,780	$291,100	$315,420
	*CALCULATIONS:
	First of all, we need to calculate variable cost per unit for the preparation of Flexible budget.
	Variable overhead cost per unit = Particular variable overhead cost / Estimated direct labor hours
	Indirect factory wages	$133,000 / 14,000	$9.50	per direct labor hour
	Power and light	$6,440 / 14,000	$0.46	per direct labor hour
	Indirect materials	$30,800 / 14,000	$2.20	per direct labor hour
	*Calculations for Total Variable cost:
		12,000	14,000	16,000
	Indirect factory wages	$9.50 * 12,000	$9.50 * 14,000	$9.50 * 16,000
	Power and light	$0.46 * 12,000	$0.46 * 14,000	$0.46 * 16,000
	Indirect materials	$2.20 * 12,000	$2.20 * 14,000	$2.20 * 16,000
	*Fixed overhead costs remain constant on each level of activity (direct labor hours).