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 17,000 hours of productive capacity in the department:

Variable overhead costs:
Indirect factory labor	$158,100
Power and light	5,100
Indirect materials	56,100
Total variable overhead cost		$219,300
Fixed overhead costs:
Supervisory salaries	$76,760
Depreciation of plant and equipment	48,250
Insurance and property taxes	30,700
Total fixed overhead cost		155,710
Total factory overhead cost		$375,010

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 15,000, 17,000, and 19,000 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	15,000	17,000	19,000
Variable overhead costs:
Indirect factory labor	$fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Power and light	fill in the blank 4	fill in the blank 5	fill in the blank 6
Indirect materials	fill in the blank 7	fill in the blank 8	fill in the blank 9
Total variable factory overhead	$fill in the blank 10	$fill in the blank 11	$fill in the blank 12
Fixed factory overhead costs:
Supervisory salaries	$fill in the blank 13	$fill in the blank 14	$fill in the blank 15
Depreciation of plant and equipment	fill in the blank 16	fill in the blank 17	fill in the blank 18
Insurance and property taxes	fill in the blank 19	fill in the blank 20	fill in the blank 21
Total fixed factory overhead	$fill in the blank 22	$fill in the blank 23	$fill in the blank 24
Total factory overhead	$fill in the blank 25	$fill in the blank 26	$fill in the blank 27

Answer 1

Answer:

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours	15,000	17,000	19,000
Variable overhead costs:
Indirect factory labor	139,500	158,100	176,700
Power and light	4,500	5,100	5,700
Indirect materials	49,500	56,100	62,700
Total variable factory overhead	193,500	219,300	245,100
Fixed factory overhead costs:
Supervisory salaries	76,760	76,760	76,760
Depreciation of plant and equipment	48,250	48,250	48,250
Insurance and property taxes	30,700	30,700	30,700
Total fixed factory overhead	155,710	155,710	155,710
Total factory overhead	349,210	375,010	400,810

Calculation:

Here we need to repare a flexible factory overhead cost budget for the Press Department for November for 15,000, 17,000, and 19,000 hours of production.

Here we need to calculate the Variable overhead costs per unit first. For that we need to divide the Variable overhead costs with the  17,000 hours of productive capacity in the department.

Indirect factory labor = 158,100 / 17,000 = 9.30
Power and light = 5,100/ 17,000 = 0.30
Indirect materials = 56,100/ 17,000 = 3.30

Then we need to multiply it with the 15,000, 17,000, and 19,000 hours of production.

15,000 Hours:

Indirect factory labor = 9.30 x 15,000 = 139,500
Power and light = 0.30 x 15,000 = 4,500
Indirect materials = 3.30 x 15,000 = 49,500

17,000 Hours:

Indirect factory labor = 9.30 x 17,000 = 158,100
Power and light = 0.30 x 17,000 = 5,100
Indirect materials = 3.30 x 17,000 = 56,100

19,000 Hours:

Indirect factory labor = 9.30 x 19,000 = 176,700
Power and light = 0.30 x 19,000 = 5,700
Indirect materials = 3.30 x 19,000 = 62,700

Then we need to include the Fixed factory overhead costs which remains the same.