Question

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 9,000 hours of productive capacity in the department:

Variable overhead costs:
Indirect factory labor	$87,300
Power and light	3,780
Indirect materials	27,000
Total variable overhead cost		$118,080
Fixed overhead costs:
Supervisory salaries	$41,330
Depreciation of plant and equipment	25,980
Insurance and property taxes	16,530
Total fixed overhead cost		83,840
Total factory overhead cost		$201,920

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 7,000, 9,000, and 11,000 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	7,000	9,000	11,000
Variable overhead costs:
Indirect factory labor	$	$	$
Power and light
Indirect materials
Total variable factory overhead	$	$	$
Fixed factory overhead costs:
Supervisory salaries	$	$	$
Depreciation of plant and equipment
Insurance and property taxes
Total fixed factory overhead	$	$	$
Total factory overhead	$	$	$

Answer 1

Solution - Fixed Overhead budget

Leno Manufacturing company

Factory Overhead cost budget - Press Department

For the Month ended November 30

Direct Labour Hours	7000 Hours	9000 Hours	11000 Hours
Variable Overhead cost
Indirect Factory labour	$67900 ($87300/9000*7000)	$87300	$106700 ($87300/9000*11000)
Power and light	$2940 ($3780/9000*7000)	$3780	$4620 ($3780/9000*11000)
Indirect Materials	$21000 ($27000/9000*7000)	$27000	$33000 ($27000/9000*11000)
Total Variable factory Overhead (A)	$91840	$118080	$144320
Fixed Factory overhead cost
Supervisory salaries	$41330	$41330	$41330
Depreciation of Plant and equipment	$25980	$25980	$25980
Insurance and Property taxes	$16530	$16530	$16530
Total Fixed factory Overhead (B)	$83840	$83840	$83840
Total Factory Overhead (A+B)	$175680	$201920	$228160

Note :

a) Fixed cost does not change with the change in activity level. Fixed cost

b) Variable cost changes with the change in activity level.