Leno Manufacturing Company prepared the following factory overhead cost budget f
ID: 2447830 • Letter: L
Question
Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 20,000 hours of productive capacity in the department:
Leno Manufacturing Company - Press Department
Factory Overhead Cost Budget—Press Department
For the Month Ended October 31
1
Variable overhead cost:
2
Indirect factory labor
$180,000.00
3
Power and light
12,000.00
4
Indirect materials
64,000.00
5
Total variable overhead cost
$256,000.00
6
Fixed overhead costs:
7
Supervisory salaries
$80,000.00
8
Depreciation of plant and equipment
50,000.00
9
Insurance and property taxes
32,000.00
10
Total fixed overhead cost
162,000.00
11
Total factory overhead cost
$418,000.00
Amount Descriptions
Depreciation of plant and equipment
Indirect factory labor
Indirect materials
Insurance and property taxes
Power and light
Supervisory salaries
Total factory overhead cost
Total fixed overhead cost
Total variable overhead cost
Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 18,000, 20,000, and 22,000 hours of production. Refer to the Amount Descriptions for exact wording of text entries.
Leno Manufacturing Company - Press Department
Factory Overhead Cost Budget—Press Department
For the Month Ended November 30
1
Direct labor hours
18,000
20,000
22,000
2
Variable overhead cost:
3
4
5
6
7
Fixed overhead cost:
8
9
10
11
12
Explanation / Answer
Notes:
We will use 20,000 hours as the basis to arrive at variable overhead costs per hour.
Indirect Factory Labor = 180,000/20,000 = $9
Power and Light = 12,000/20,000 = $.60
Indirect Materials = 64,000/20,000 = $3.20
________
Variable Overhead Cost (18,000 hours):
Indirect Factory Labor = 18,000*9 = $162,000
Power and Light = 18,000*.60 = $10,800
Indirect Materials = 18,000*3.20 = $57,600
________
Variable Overhead Cost (22,000 hours):
Indirect Factory Labor = 22,000*9 = $198,000
Power and Light = 22,000*.60 = $13,200
Indirect Materials = 22,000*3.20 = $70,400
________
Fixed overheads remain constant over different levels, therefore, there is no change in different types of fixed cost for different labor hours.
Leno Manufacturing Company - Press Department Factory Overhead Cost Budget—Press Department For the Month Ended November 30 1 Direct Labor Hours 18,000 20,000 22,000 2 Variable Overhead Cost: 3 Indirect Factory Labor 162,000 180,000 198,000 4 Power and Light 10,800 12,000 13,200 5 Indirect Materials 57,600 64,000 70,400 6 Total Variable Overhead Cost (A) 230,400 256,000 281,600 7 Fixed Overhead Costs 8 Supervisory Salaries 80,000 80,000 80,000 9 Depreciation of Plant and Equipment 50,000 50,000 50,000 10 Insurance and Property Taxes 32,000 32,000 32,000 11 Total Fixed Overhead Cost (B) 162,000 162,000 162,000 12 Total Factory Overhead Cost (A+B) $392,400 $418,000 $443,600Related Questions
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