Name: Date: Instructor: Course: Accounting Principles, Ninth Edition by Weygandt
ID: 2356862 • Letter: N
Question
Name: Date:
Instructor: Course:
Accounting Principles, Ninth Edition by Weygandt, Kieso, and Kimmel
"Solving Accounting Principles Problems Using Microsoft Excel
for Windows by Rex A Schildhouse"
P24-1A Malone Company estimates that 360,000 direct labor hours will be worked during the coming
year, 2010, 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 $90,000 Indirect labor $126,000
Depreciation 60,000 Indirect materials 90,000
Insurance 30,000 Repairs 54,000
Rent 24,000 Utilities 72,000
Property taxes 18,000 Lubricants 18,000
$222,000 $360,000
It is estimated that direct labor hours worked each month will range from 27,000 to 36,000
hours.
During October, 27,000 direct labor hours were worked and the following overhead costs were incurred.
Fixed Overhead Costs Variable Overhead Costs
Supervision $7,500 Indirect labor $10,360
Depreciation 5,000 Indirect materials 6,400
Insurance 2,470 Repairs 4,000
Rent 2,000 Utilities 5,700
Property taxes 1,500 Lubricants 1,640
Instructions:
(a) Prepare a monthly flexible manufacturing overhead budget for each increment of 3,000 direct
labor hours over the relevant range for the year ending December 31, 2010.
MALONE COMPANY
Packaging Department
Flexible Monthly Manufacturing Overhead Budget
For the Year 2010
Activity level
Direct labor hours Number Number Number Number
Variable costs
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Total variable costs ($1.00) Formula Formula Formula Formula
Fixed costs
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Title Amount Amount Amount Amount
Total fixed costs Formula Formula Formula Formula
Total costs Formula Formula Formula Formula
(b) Prepare a flexible budget report for October.
MALONE COMPANY
Packaging Department
Manufacturing Overhead Budget Report (Flexible)
For the Month Ended October 31, 2010
Budgeted at Actual Costs Difference
Direct labor hours (DLH) Amount Amount "Favorable - Fav
Unfavorable - Unf"
Variable costs DLH DLH
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Total variable costs ($1.00) Formula Formula Formula Fav / Unf
Fixed costs
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Title Amount Amount Formula Fav / Unf
Total fixed costs Formula Formula Formula Fav / Unf
Total costs Formula Formula Formula Fav / Unf
(c) Comment on management's efficiency in controlling manufacturing overhead costs in October.
Explanation / Answer
MALONE COMPANY
Packaging Department
Flexible monthly Manufacturing Overhead Budget
For the year 2010
360000 hrs
Per hour
27000 hrs
30000 hrs
33000 hrs
36000 hrs
MALONE COMPANY
Packaging Department
Flexible monthly Manufacturing Overhead Budget
For the year 2010
Estimated direct labor hours in a year360000 hrs
Per hour
27000 hrs
30000 hrs
33000 hrs
36000 hrs
Variable overhead: Indirect labor $126,000 0.35 9450 10500 11550 12600 Indirect material $90,000 0.25 6750 7500 8250 9000 Repairs $54,000 0.15 4050 4500 4950 5400 Utilities $72,000 0.2 5400 6000 6600 7200 Lubricants $18,000 0.05 1350 1500 1650 1800 Total variable cost - (A) $360,000 1 27000 30000 33000 36000 Fixed cost: Per month Supervision $90,000 7500 7500 7500 7500 7500 Depreciation $60,000 5000 5000 5000 5000 5000 Insurance $30,000 2500 2500 2500 2500 2500 Rent $24,000 2000 2000 2000 2000 2000 Property tax $18,000 1500 1500 1500 1500 1500 Total fixed cost - (B) $222,000 18500 18500 18500 18500 18500 Total cost (A + B) $582,000 48500 45500 48500 51500 54500Related Questions
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