pollitt potato packers has a flexible budget for manufacturing overhead that is

Question

pollitt potato packers has a flexible budget for manufacturing overhead that is based on direct labour-hours. the following overhead costs appear on the flexible budget at the 200,000-hour level of activity:
variable overhead cost
packing supplies 120,000
indirect labour 180,000
fixed overhead costs
utilities 100,000
insurance 40,000
rent 20,000

1. at an activity level of 180,000 direct labour-hours, the flexible budget would show indirect labour cost of?

2. the flexible budget would show total variable overhead cost in dollars per direct labour-hour as?

3. at an activity level of 160,000 direct labour-hours, the flexible budget would show the budgeted amount for rent to be?

4. at an activity level of 180,000 direct labour-hour, the flexible budget would show total budgeted fixed costs to be?

5. at an activity level of 160,000 direct labour-hours, the flexible budget would show the budgeted amount for utilities to be?

Explanation / Answer

1. at an activity level of 180,000 direct labour-hours, the flexible budget would show indirect labour cost of? A. = $162,000 2. the flexible budget would show total variable overhead cost in dollars per direct labour-hour as?
A. = $1.5 3. at an activity level of 160,000 direct labour-hours, the flexible budget would show the budgeted amount for rent to be?
A. = $20,000 4. at an activity level of 180,000 direct labour-hour, the flexible budget would show total budgeted fixed costs to be?
A. = $160,000 5. at an activity level of 160,000 direct labour-hours, the flexible budget would show the budgeted amount for utilities to be? A. = $100,000 Working: 200000 180000 160000 Hours Hours Hours Variable overhead: Packing supplies 120000 108000 96000 Indirect labor 180000 162000 144000 Total variable overhead: - (A) 300000 270000 240000 Variable cost per labor hour: $1.50 $1.50 $1.50 Fixed overhead: Utilities 100000 100000 100000 Insurance 40000 40000 40000 Rent 20000 20000 20000 Total fixed cost: - (B) 160000 160000 160000 Total cost (A + B) 460000 430000 400000 Total Cost per labor hour: $2.30 $2.39 $2.50 Assumptions: Variable cost is fixed per labor hour but vary for total. Fixed cost is fixed for total and vary for unit. Fixed costs are not changed as per production, these are constant for certain limit of production. Thank you.... 200000 180000 160000 Hours Hours Hours Variable overhead: Packing supplies 120000 108000 96000 Indirect labor 180000 162000 144000 Total variable overhead: - (A) 300000 270000 240000 Variable cost per labor hour: $1.50 $1.50 $1.50 Fixed overhead: Utilities 100000 100000 100000 Insurance 40000 40000 40000 Rent 20000 20000 20000 Total fixed cost: - (B) 160000 160000 160000 Total cost (A + B) 460000 430000 400000 Total Cost per labor hour: $2.30 $2.39 $2.50

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