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 8,000 hours of productive capacity in the department: Variable overhead cost: Indirect factory labor $70,400 Power and light 2,400 Indirect materials 19,200 Total variable overhead cost $92,000 Fixed overhead cost: Supervisory salaries $32,200 Depreciation of plant and equipment 20,240 Insurance and property taxes 12,880 Total fixed overhead cost 65,320 Total factory overhead cost $157,320 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 6,000, 8,000, and 10,000 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 6,000 8,000 10,000 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 $ $ $

Answer 1

Solution:

Computation of standard variable overhead per hour
Particulars	Budgeted Cost	Budgted DLH	Overhead Rate
Indirect factory Labor	$70,400.00	8000	$8.80
Power and light	$2,400.00	8000	$0.30
Indirect materials	$19,200.00	8000	$2.40

Leno Manufacturing Company
Flexible Overhead Budget
For the month of November
Particulars	Hours - 6000	Hours - 8000	Hours - 10000
Nos of hours	6000	8000	10000
Variable Costs:
Indirect factory Labor	$52,800.00	$70,400.00	$88,000.00
Power and light	$1,800.00	$2,400.00	$3,000.00
Indirect materials	$14,400.00	$19,200.00	$24,000.00
Total variable costs	$69,000.00	$92,000.00	$115,000.00
Fixed Costs:
Supervisory Salaries	$32,200.00	$32,200.00	$32,200.00
Depreciation of Plant and Equipment	$20,240.00	$20,240.00	$20,240.00
Insurance and property taxes	$12,880.00	$12,880.00	$12,880.00
Total Fixed Costs	$65,320.00	$65,320.00	$65,320.00
Total Costs	$134,320.00	$157,320.00	$180,320.00