Can you show work on how to figure out problems A and B? Problem T4-10 Gerald/Br

Question

Can you show work on how to figure out problems A and B?

Problem T4-10 Gerald/Brooke, Ltd., manufactures shirts, which it sells to customers for embossing with various slogans and emblems. The standard cost card for the shirts is as follows Standard Standard Standard QuantityCost 1.25 yards 0.25 DLH 0.25 DLH 0.25 DLH Price $2 Direct materials Direct labor Variable overhead Fixed overhead $1.6 per yard $12 per DLH $4 per DLH $6 per DLH 1.5 $7.5 The annual budgets were based on the production of 1,000,000 shirts, using 250,000 direct labor hours. Due to slight seasonal demands, the company plans to produce 80,000 shirts per month, January through August, and 90,000 shirts per month, September through December (a) Calculate total budgeted fixed overhead cost Total budgeted fixed overhead cost 1,000,000 (b) What is the monthly fixed overhead budget amount? Does it depend on the number of shirts that are produced each month? Monthly fixed overhead budget amount

Explanation / Answer

(a) Total budgeted fixed overhead cost = $1.50 x 1,000,000 shirts = $1,500,000

OR

Total budgeted fixed overhead cost = $6 x 250,000 DLH = $1,500,000

(b) Monthly fixed overhead budget amount = $1,500,000/12 = $125,000

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