Exercise 5-18 Bonita Sleep Systems manufactures nylon mesh hammocks for a chain

Question

Exercise 5-18 Bonita Sleep Systems manufactures nylon mesh hammocks for a chain of retail outlets located throughout the southeast. The company plans to manufacture and sell 28,400 hammocks during the fourth quarter. Overhead costs are expected to include: 5.56 Variable indirect materials$ Variable indirect labor Other variable overhead Salaries Insurance Depreciation per hammock $12.20 per hammock $2.03 per hammock $80,100 per quarter $ 6,300 per quarter $46,300 per quarter Prepare Bonita's manufacturing overhead budget for the fourth quarter

Explanation / Answer

Manufacturing overhead Budget for the 4th year is as calculated below:

Bonita Sleep Systems Manufacturing Overhead Particulars Per Hammock Amount ($) Manufacturing Overhead Variable Overhead Variable indirect material 5.56 157,904 Variable indirect labor 12.20 346,480 Other variable overhead 2.03 57,652 Total variable overhead 562,036 Fixed Overhead salaries 80,100 Insurance 6,300 Depreciation 46,300 Total fixed overhead 132,700 Total manufacturing overhead 694,736

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