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Halle Brothers Water Pump Company, Inc. uses a flexible budget for manufacturing overhead based on machine...

Halle Brothers Water Pump Company, Inc. uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows:
​Indirect labor​$5.00
​Indirect materials​2.50
​Maintenance​.80
​Utilities​.30
Fixed overhead costs per month are:
​Supervision​$2,800
​Insurance​1,200
​Property taxes​700
​Depreciation​1,500
The company believes it will normally operate in a range of 2,000 to 5,000 machine hours per month.
Required
2. Prepare a budget report with variances based on the actual costs incurred as detailed below when the company operated in April 2020 at a level of 3,200 machine hours.
Indirect labor​$16,800
​Indirect materials 7,680
​Maintenance 2,880
​Utilities 1,600

Fixed overhead costs per month are:
​Supervision​$3,080
​Insurance​1,200
​Property taxes​735
​Depreciation​1,500

Solutions

Expert Solution

Total Machine Hours                                   3,200
Cost/hour
Indirect labor 5
Indirect Material 2.5
Maintenance 0.8
Utilities 0.3
Head Forecasted Cost Actual Cost Variance Variance (%)
Indirect labor                                 16,000                                                16,800                                  800 5%
Indirect Material                                   8,000                                                  7,680                               (320) -4%
Maintenance                                   2,560                                                  2,880                                  320 13%
Utilities                                       960                                                  1,600                                  640 67%
Supervision                                   2,800                                                  3,080                                  280 10%
Insurance                                   1,200                                                  1,200                                     -   0%
Property Taxes                                       700                                                      735                                    35 5%
Depreciation                                   1,500                                                  1,500                                     -   0%
Total                                 33,720                                                35,475                              1,755 5%

The company faced a variance of 5% on overall cost with utilities showing maximum variance.

ekkarill92 answered 2 years ago
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