Bumblebee Company estimates that 402,600 direct labor hours will be worked during the coming year, 2020,...

Bumblebee Company estimates that 402,600 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs		Variable Overhead Costs
Supervision	$89,280	Indirect labor	$169,092
Depreciation	73,440	Indirect materials	80,520
Insurance	26,040	Repairs	40,260
Rent	21,360	Utilities	60,390
Property taxes	22,440	Lubricants	40,260
	$232,560		$390,522

It is estimated that direct labor hours worked each month will range from 22,800 to 32,100 hours.

During October, 22,800 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: Supervision $7,440, Depreciation $6,120, Insurance $2,125, Rent $1,780, and Property taxes $1,870.

Variable overhead costs: Indirect labor $10,566, Indirect materials, $4,260, Repairs $2,240, Utilities $3,740, and Lubricants $2,640.

Prepare a flexible budget report for October.

Expert Solution

Solution:

Computation of standard variable overhead per direct labor hour
Particulars	Budgeted Cost	Budgted DLH	Overhead Rate
Indirect Labor	$169,092.00	402600	$0.42
Indirect materials	$80,520.00	402600	$0.20
Repairs	$40,260.00	402600	$0.10
Utilities	$60,390.00	402600	$0.15
Lubricants	$40,260.00	402600	$0.10

Bumblebee Company
Packaging Department
Manufacturing overhead flexible budget report
For the month ended October 31, 2020
Particulars	Budget	Actual Cost	Variance	Favorable / Unfavorable / Neither favorable nor unfavorable
Variable Costs:
Indirect Labor	$9,576.00	$10,566.00	$990.00	Unfavorable
Indirect materials	$4,560.00	$4,260.00	$300.00	Favorable
Repairs	$2,280.00	$2,240.00	$40.00	Favorable
Utilities	$3,420.00	$3,740.00	$320.00	Unfavorable
Lubricants	$2,280.00	$2,640.00	$360.00	Unfavorable

Total variable costs	$22,116.00	$23,446.00	$1,330.00	Unfavorable

Fixed Costs:
Supervision	$7,440.00	$7,440.00	$0.00	Neither Favorable nor Unfavorable
Depreciation	$6,120.00	$6,120.00	$0.00	Neither Favorable nor Unfavorable
Insurance	$2,170.00	$2,125.00	$45.00	Favorable
Rent	$1,780.00	$1,780.00	$0.00	Neither Favorable nor Unfavorable
Property taxes	$1,870.00	$1,870.00	$0.00	Neither Favorable nor Unfavorable

Total Fixed Costs	$19,380.00	$19,335.00	$45.00	Favorable
Total Costs	$41,496.00	$42,781.00	$1,285.00	Unfavorable

ekkarill92 answered 1 year ago

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