Question

tlanta Company is preparing its manufacturing overhead budget for 2017. Relevant data consist of the following. Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000. Direct labor: Time is 1.5 hours per unit. Variable overhead costs per direct labor hour: indirect materials $0.80; indirect labor $1.20; and maintenance $0.50. Fixed overhead costs per quarter: supervisory salaries $35,000; depreciation $15,000; and maintenance $12,000. Prepare the manufacturing overhead budget for the year, showing quarterly data

Answer 1

Solution:

	Quarter - 1	Quarter - 2	Quarter - 3	Quarter - 4	Year
Variable costs
Indirect materials ($0.80/hour)	12,000	14,400	16,800	19,200	62,400
Indirect labor ($1.20/hour)	18,000	21,600	25,200	28,800	93,600
Maintenance ($0.50/hour)	7,500	9,000	10,500	12,000	39,000
Total variable	37,500	45,000	52,500	60,000	195,000
Fixed costs
Supervisory salaries	35,000	35,000	35,000	35,000	140,000
Depreciation	15,000	15,000	15,000	15,000	60,000
Maintenance	12,000	12,000	12,000	12,000	48,000
Total fixed	62,000	62,000	62,000	62,000	248,000
Total manufacturing overhead	99,500	107,000	114,500	122,000	443,000
Units to be produced	10,000	12,000	14,000	16,000	52,000
Direct labor hours per unit	1.5	1.5	1.5	1.5	1.5
Total direct labor hours	15,000	18,000	21,000	24,000	78,000

Manufacturing overhead rate per direct labor hour = 5.68