Fixed Overhead Costs Variable Overhead Costs $84,840 $153,502 70,080 88,182 27,2

Question

Fixed Overhead Costs

Variable Overhead Costs

$84,840

$153,502

70,080

88,182

27,240

48,990

25,920

75,118

21,720

22,862

$229,800

$388,654

COOK COMPANY
Packaging Department
Monthly Manufacturing Overhead Flexible Budget
For the Year 2014

LINK TO TEXT

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COOK COMPANY
Packaging Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended October 31, 2014

Difference

Budget

Actual Costs

Favorable (F)
Unfavorable (U)
Neither Favorable
nor Unfavorable (N)

Cook Company estimates that 326,600 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, are computed for the year.

Fixed Overhead Costs

Variable Overhead Costs

Supervision

$84,840

Indirect labor

$153,502

Depreciation

70,080

Indirect materials

88,182

Insurance

27,240

Repairs

48,990

Rent

25,920

Utilities

75,118

Property taxes

21,720

Lubricants

22,862

$229,800

$388,654

It is estimated that direct labor hours worked each month will range from 29,400 to 37,800 hours.

During October, 29,400 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: supervision $7,070, depreciation $5,840, insurance $2,243, rent $2,160, and property taxes $1,810.

Variable overhead costs: indirect labor $14,907, indirect materials, $7,531, repairs $4,331, utilities $7,044, and lubricants $2,472.

Explanation / Answer

1) Flexible budget for the month Number of hours 29400 32200 35000 37800 Fixed Manufacturing overhead Supervision 7070 7070 7070 7070 Depriciation 5840 5840 5840 5840 Insurance 2270 2270 2270 2270 Rent 2160 2160 2160 2160 Prperty tax 1810 1810 1810 1810 Total Fixed Manufacturing overhead (A) 19150 19150 19150 19150 Variable Manufacturing overhead Indirect labor ( 153502/326600* no of hours) 13818 15134 16450 17766 Indirect materials (88182/326600* no of hours) 7938 8694 9450 10206 Repairs ( 48990/326600* no of hours) 4410 4830 5250 5670 Utilities ( 75118/326600* no of hours) 6762 7406 8050 8694 Lubricants ( 22862/326600* no of hours) 2058 2254 2450 2646 Total Variable Manufacturing overhead (B) 34986 38318 41650 44982 Total manufacturing overhead (A + B) 54136 57468 60800 64132 2) Flexible budget report for October Number of hours 29400 Budget Actual Variance F/U A B A-B Variable Manufacturing overhead Indirect labor ( 153502/326600* no of hours) 13818 14907 -1089 Unfavourable Indirect materials (88182/326600* no of hours) 7938 7531 407 Favourable Repairs ( 48990/326600* no of hours) 4410 4331 79 Favourable Utilities ( 75118/326600* no of hours) 6762 7044 -282 Unfavourable Lubricants ( 22862/326600* no of hours) 2058 2472 -414 Unfavourable Total Variable Manufacturing overhead (B) 34986 36285 -1299 Unfavourable Fixed Manufacturing overhead Supervision 7070 7070 0 No deviation Depriciation 5840 5840 0 No deviation Insurance 2270 2243 27 Favourable Rent 2160 2160 0 No deviation Property tax 1810 1810 0 No deviation Total Fixed Manufacturing overhead (A) 19150 19123 27 Favourable Total manufacturing overhead (A + B) 54136 55408 -1272 Unfavourable

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