XYZ Company estimates that 240,000 direct labor hours will be worked during 2018
ID: 2404878 • Letter: X
Question
XYZ Company estimates that 240,000 direct labor hours will be worked during 2018 in the Painting Department. Based on this estimate, the following budget was developed for manufacturing overhead costs Variable Overhead Costs Fixed Overhead Costs Indirect labor Indirect materials Repairs Utilities Lubricants $67,200 40,800 43,200 26,400 9,600 $187,200 Supervision Depreciation Insurance Rent Property taxes $75,000 30,000 12,000 9,000 6,000 $132,000 ,000 to It is estimated that direct labor hours worked each month will range from 16 24,000 hours. uring January, 20,000 direct labor hours were worked and the following overhead costs were incurred. Variable Overhead Costs Fixed Overhead Costs Indirect labor Indirect materials Repairs Utilities Lubricants $6,100 3,700 3,200 2,100 850 $15,950 Supervision Depreciation Insurance Rent Property taxes $6,250 2,500 1,000 750 500 $11,000 Instructions for Project 2: Using Excel, prepare a monthly flexible manufacturing overhead budget for each increment of 2,000 direct labor hours over the relevant range for the year ending December 31, 2018. Refer to Illustration 24-13 on page 1115 for an example. 1. I, prepare a manufacturing overhead budget report for January in good Refer to Illustration 24-10 on page 1113 as a guide. 2. Using Excel form.Explanation / Answer
Flexible Manufacturing Overhead Budget : Direct Labor Hours 240000 16000 18000 20000 22000 24000 Variable Overhead costs: Per Hour Cost Indirect Labor 67200 0.28 4,480 5,040 5,600 6,160 6,720 Indirect Material 40800 0.17 2,720 3,060 3,400 3,740 4,080 repair 43200 0.18 2,880 3,240 3,600 3,960 4,320 Utilities 26400 0.11 1,760 1,980 2,200 2,420 2,640 Lubricants 9600 0.04 640 720 800 880 960 Total Variable Overhead Costs 187200 12,480 14,040 15,600 17,160 18,720 Add: Fixed Overhead costs: supervision 75000 75,000 75,000 75,000 75,000 75,000 depreciation 30000 30,000 30,000 30,000 30,000 30,000 insurance 12000 12,000 12,000 12,000 12,000 12,000 rent 9000 9,000 9,000 9,000 9,000 9,000 property taxes 6000 6,000 6,000 6,000 6,000 6,000 Total Fixed Overhead Costs 132000 1,32,000 1,32,000 1,32,000 1,32,000 1,32,000 Total Manufacturing Overhead costs 1,44,480 1,46,040 1,47,600 1,49,160 1,50,720 2. Manufacturing Overhead Costs Budget for the month of January : Budgeted Actual Activity Level 20000 20000 Favourable or Un Favourable Variable Overhead costs: Indirect Labor 5600 6100 -500 U Indirect Material 3400 3700 -300 U repair 3600 3200 400 F Utilities 2200 2100 100 F Lubricants 800 850 -50 U Total Variable Overhead Costs 15600 15950 -350 U Add: Fixed Overhead costs: supervision 75,000 75,000 0 depreciation 30,000 30,000 0 insurance 12,000 12,000 0 rent 9,000 9,000 0 property taxes 6,000 6,000 0 Total Fixed Overhead Costs 1,32,000 1,32,000 0 Total Manufacturing Overhead costs 1,47,600 1,47,950 -350 U
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