Braemar Saddlery uses department budgets and performance reports in planning and

Question

Braemar Saddlery uses department budgets and performance reports in planning and controlling its manufacturing operations. The following annual performance report for the custom saddle production department was presented to the president of the company:

Budgeted Costs
for 5,000 Units Actual
Costs
Incurred Over
(Under)
Budget Per Unit Total Variable manufacturing costs: Direct materials $ 30.00 $ 150,000 $ 171,000 $ 21,000 Direct labor 48.00 240,000 261,500 21,500 Indirect labor 15.00 75,000 95,500 20,500 Indirect materials, supplies, etc. 9.00 45,000 48,400 3,400 Total variable manufacturing costs $ 102.00 $ 510,000 $ 576,400 $ 66,400 Fixed manufacturing costs: Lease rental $ 9.00 $ 45,000 $ 45,000 $

Explanation / Answer

Explanation: b. Manufacturing overhead incurred: Indirect labor $ 95,500 Indirect materials, supplies, etc. 48,400 Total fixed manufacturing costs 248,600 Total manufacturing overhead incurred $ 392,500 Manufacturing overhead applied, 150% of $261,500 (direct labor) 392,250 Underapplied manufacturing overhead $ 25

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