Lowell Company’s manufacturing overhead budget for the first quarter of 2014 con

Question

Lowell Company’s manufacturing overhead budget for the first quarter of 2014 contained the following data.

Actual variable costs were: indirect materials $14,630, indirect labor $9,519, utilities $9,325, and maintenance $4,663. Actual fixed costs equaled budgeted costs except for property taxes and insurance, which were $8,281. The actual activity level equaled the budgeted level.

All costs are considered controllable by the production department manager except for depreciation, and property taxes and insurance.

(a) Prepare a manufacturing overhead flexible budget report for the first quarter. (List variable costs before fixed costs.)
(b) Prepare a responsibility report for the first quarter.

Variable Costs Fixed Costs Indirect materials $11,929 Supervisory salaries $35,476 Indirect labor 10,913 Depreciation 7,813 Utilities 7,643 Property taxes and insurance 7,758 Maintenance 5,802 Maintenance 4,902

Explanation / Answer

Answer:

b)

Flexible Budget Budgeted Actual Difference (F/U) Variable Costs: in $ in $ Indirect materials 11,929 14,630 2701 (U) Indirect labor 10,913 9,519 1394 (F) Utilities 7,643 9,325 1682 (U) Maintenance 5,802 4,663 1139 (F) Total Variable Cost 36,287 38,137 Fixed Costs: Supervisory salaries 35,476 35,476 Depreciation 7,813 7,813 Property taxes and insurance 7,758 8,281 523 (U) Maintenance 4,902 4,902 Total Fixed Cost 55,949 56,472 Total Cost 92,236 94,609 2373 (U)

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