Chamberlin Company estimates that 310,700 direct labor hours will be worked duri

Question

Chamberlin Company estimates that 310,700 direct labor hours will be worked during the coming year, 2012, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs

Variable Overhead Costs

21,216

24,856

$230,676

$316,914

It is estimated that direct labor hours worked each month will range from 21,800 to 28,100 hours.
During October, 21,800 direct labor hours were worked and the following overhead costs were incurred.

Variable overhead costs: Indirect labor $8,576, Indirect materials, $3,998, Repairs $3,446, Utilities $5,344, and Lubricants $2,059.

Prepare a monthly flexible manufacturing overhead budget for each increment of 2,100 direct labor hours over the relevant range for the year ending December 31, 2012.

For the Year 2012

Complete the flexible budget report for October.

For the Month Ended October 31, 2012

Fixed Overhead Costs

Variable Overhead Costs

Supervision $95,568 Indirect labor $108,745 Depreciation 56,340 Indirect materials 62,140 Insurance 32,064 Repairs 49,712 Rent 25,488 Utilities 71,461 Property taxes

21,216

Lubricants

24,856

$230,676

$316,914

Explanation / Answer

CHAMBERLIN PACKING DEPARTMENT Monthly Overhead Flexible Budget For the Year Dec 31,2012 Direct Labour Hour 21800 23900 26000 28100 Variable Cost Indirect Material(.20) $    4,360.00 $    4,780.00 $    5,200.00 $    5,620.00 Indirect Labor(.35) $    7,630.00 $    8,365.00 $    9,100.00 $    9,835.00 Repairs(.16) $    3,488.00 $    3,824.00 $    4,160.00 $    4,496.00 Utilities(.23) $    5,014.00 $    5,497.00 $    5,980.00 $    6,463.00 Lubricants(.08) $    1,744.00 $    1,912.00 $    2,080.00 $    2,248.00 Total Variable cost $ 22,236.00 $ 24,378.00 $ 26,520.00 $ 28,662.00 Fixed cost Supervision $    7,964.00 $    7,964.00 $    7,964.00 $    7,964.00 Depreciation $    4,695.00 $    4,695.00 $    4,695.00 $    4,695.00 Insurance $    2,625.00 $    2,625.00 $    2,625.00 $    2,625.00 Rent $    2,124.00 $    2,124.00 $    2,124.00 $    2,124.00 Property Taxes $    1,768.00 $    1,768.00 $    1,768.00 $    1,768.00 Total fixed cost $ 19,176.00 $ 19,176.00 $ 19,176.00 $ 19,176.00 Total cost $ 41,412.00 $ 43,554.00 $ 45,696.00 $ 47,838.00 CHAMBERLIN PACKING DEPARTMENT Monthly Overhead Flexible Budget For the month ended 31,October 2012 Budget Actual Difference F/U Direct Labour hours $ 21,800.00 $ 21,800.00 Indirect Material $    4,360.00 $    3,998.00 $        362.00 (F) Indirect Labor $    7,630.00 $    8,576.00 $     (946.00) (U) Repairs $    3,488.00 $    3,446.00 $          42.00 (F) Utilities $    5,014.00 $    5,344.00 $     (330.00) (U) Lubricants $    1,744.00 $    2,059.00 $     (315.00) (U) Total Variable cost $ 22,236.00 $ 23,423.00 Fixed cost Supervision $    7,964.00 $    7,964.00 $                 -   Depreciation $    4,695.00 $    4,695.00 $                 -   Insurance $    2,625.00 $    2,625.00 $                 -   Rent $    2,124.00 $    2,124.00 $                 -   Property Taxes $    1,768.00 $    1,768.00 $                 -   Total fixed cost $ 19,176.00 $ 19,176.00 Total cost $ 41,412.00 $ 42,599.00

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