Problem 22-2A Zelmer Company manufactures tablecloths. Sales have grown rapidly

Question

Problem 22-2A Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2014 The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours Rate per Direct Labor Hour Annual Fixed Costs Variable costs Indirect labor Indirect materials Factory utilities Factory repairs $0.42 Supervision 0.53 Depreciation 0.32 Insurance 0.22 Rent $45,696 18,840 15,816 27,012 The master overhead budget was prepared on the expectation that 479,300 direct labor hours will be worked during the year. In June, 38,280 direct labor hours were worked. At that level of activity, actual costs were as shown below Variable-per direct labor hour: indirect labor $0.45, indirect materials $0.51, factory utilities $0.36, and factory repairs $0.27 Fixed: same as budgeted Your answer is partially correct. Try again Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2014, assuming production levels range from 36,400 to 52,300 direct labor hours. Use increments of 5,300 direct labor hours. (List variable costs before fixed costs.)

Explanation / Answer

ZELMER COMPANY

MANUFACTURING OVERHAED FLEXIBLE BUDGET

IRONING DEPARTMENT

FOR THE YEAR ENDED 2014

ZELMER COMPANY

MANUFACTURING OVERHAED FLEXIBLE BUDGET

IRONING DEPARTMENT

FOR THE YEAR ENDED 2014

pariticulars balance difference amount

Indirect material favourable balance $7656

Indirect labor unfavourable balance $11484

Factory utility unfavourable balance $15312

Factory rent   unfavourable balance $19190

Activity level Direct Labor Hours 36400 41700 47000 52300 Variable cost Factory Utillizes $11648 $13344 $15040 $16736 Factory Repairs $8008 $9174 $10340 $11506 Indirect Materials $19292 $22101 $24910 $27719 Indirect Labor $15288 $17514 $19740 $21966 Total Variable cost $54236 $62133 $70030 $77927 Fixed cost Rent $27012 $27012 $27012 $27012 Supervision $45696 $45696 $45696 $45696 Insurance $15816 $15816 $15816 $15816 Depreciation $18840 $18840 $18840 $18840 Total Fixed cost $107364 $107364 $107364 $107364 Total cost $161600 $169497 $177394 $185291

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