Exercise 22-3 THOME COMPANY Monthly Manufacturing Overhead Flexible Budget For t
ID: 2444589 • Letter: E
Question
Exercise 22-3
THOME COMPANY
Monthly Manufacturing Overhead Flexible Budget
For the Year 2014
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Exercise 22-3
Thome Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.Indirect labor $1.10 Indirect materials 0.60 Utilities 0.40
Fixed overhead costs per month are supervision $4,085, depreciation $1,835, and property taxes $874. The company believes it will normally operate in a range of 7,400–11,600 direct labor hours per month.
Prepare a monthly manufacturing overhead flexible budget for 2014 for the expected range of activity, using increments of 1,400 direct labor hours. (List variable costs before fixed costs.)
THOME COMPANY
Monthly Manufacturing Overhead Flexible Budget
For the Year 2014
$
$
$
$
Activity Level Depreciation Direct Labor Hours Fixed Costs Indirect Labor Indirect Materials Property Taxes Supervision Total Costs Total Fixed Costs Total Variable Costs Utilities Variable Costs Activity Level Depreciation Direct Labor Hours Fixed Costs Indirect Labor Indirect Materials Property Taxes Supervision Total Costs Total Fixed Costs Total Variable Costs Utilities Variable Costs Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs Activity Level Depreciation Direct Labor Hours Fixed Costs Indirect Labor Indirect Materials Property Taxes Supervision Total Costs Total Fixed Costs Total Variable Costs Utilities Variable Costs Activity Level Depreciation Direct Labor Hours Fixed Costs Indirect Labor Indirect Materials Property Taxes Supervision Total Costs Total Fixed Costs Total Variable Costs Utilities Variable Costs Activity Level Depreciation Direct Labor Hours Fixed Costs Indirect Labor Indirect Materials Property Taxes Supervision Total Costs Total Fixed Costs Total Variable Costs Utilities Variable Costs Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs$
$
$
$
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Explanation / Answer
Maintenance
Accounting
Dept
Dept
Dept A
Dept B
Total
Maintenance
Accounting
Dept
Dept
Dept A
Dept B
Total
a.
Maintaenance Dept Cost
300000
Machine hours:
Dept A
2300
Dept B
200
Total Hours
2500
Cost Allocation to Dept A
= 300000 * 2300/2500
= $276,000
b.
Accounting Dept Cost
120000
Employees
Dept A
8
Dept B
4
Total Employees
12
Cost allocation to Dept B
= 120000*4/12
= $40000
c.
Maintaenance Dept Cost
300000
Machine hours:
Accounting Dept
20
Dept A
2300
Dept B
200
Total Hours
2520
Cost Allocation to dept B
= 300000 * 200/2520
= $23,810
Costs Allocation under Direct Methode:Maintenance
Accounting
Dept
Dept
Dept A
Dept B
Total
Departments costs 300000 120000 300000 500000 1220000 Allocation: Maintenance Dept 23/25 & 2/25 -300000 276000 24000 Accounts Dept 8/12 & 4/12 -120000 80000 40000 Total Costs Allocation: 0 0 656000 564000 1220000Related Questions
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