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Problem 24-1A Bumblebee Company estimates that 387,400 direct labor hours will be worked during the coming...

Problem 24-1A

Bumblebee Company estimates that 387,400 direct labor hours will be worked during the coming year, 2017, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs

Variable Overhead Costs

Supervision

$86,640

Indirect labor

$154,960

Depreciation

72,720

Indirect materials

85,228

Insurance

28,320

Repairs

69,732

Rent

26,280

Utilities

58,110

Property taxes

22,080

Lubricants

34,866

$236,040

$402,896

It is estimated that direct labor hours worked each month will range from 24,300 to 34,200 hours.

During October, 24,300 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: Supervision $7,220, Depreciation $6,060, Insurance $2,320, Rent $2,190, and Property taxes $1,840.

Variable overhead costs: Indirect labor $10,790, Indirect materials, $4,846, Repairs $4,304, Utilities $4,025, and Lubricants $2,457.

(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,300 direct labor hours over the relevant range for the year ending

(b) Prepare a flexible budget report for October. (List variable costs before fixed costs.

Expert Solution


1)
	activity level
	Direct labor hours		24,300	27,600	30,900	34,200
	variable costs
	Indirect labor	0.4	9720	11040	12360	13680
	indirect materials	0.22	5346	6072	6798	7524
	repairs	0.18	4374	4968	5562	6156
	utilities	0.15	3645	4140	4635	5130
	lubricants	0.09	2187	2484	2781	3078
	tota variable cost	1.04	25272	28704	32136	35568
	Fixed expenses
	Supervision		7220	7220	7220	7220
	Depreciation		6060	6060	6060	6060
	insurance		2360	2360	2360	2360
	Rent		2190	2190	2190	2190
	property taxes		1840	1840	1840	1840
	total fixed expenses		19670	19670	19670	19670
	total cost		44942	48374	51806	55238



2)			budget	Actual	difference
	activity level
	Direct labor hours		24,300	24,300
	variable costs
	Indirect labor	0.4	9,720	10,790	1,070	U
	indirect materials	0.22	5346	4,846	500	F
	repairs	0.18	4374	4,304	70	F
	utilities	0.15	3645	4,025	380	U
	lubricants	0.09	2187	2,457	270	U
	tota variable cost	1.04	25272	26422	1150	U
	Fixed expenses
	Supervision		7220	7,220	0	N
	Depreciation		6060	6,060	0	N
	insurance		2360	2,320	40	F
	Rent property taxes		2190	2,190	0	N
	property taxes		1840	1,840	0	N
	total fixed expenses		19670	19,630	40	F
	total cost		44942	46052	1110	U

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