Fixed Overhead Costs Variable Overhead Costs $87,960 $178,710 67,080 108,780 28,

Question

Fixed Overhead Costs

Variable Overhead Costs

$87,960

$178,710

67,080

108,780

28,800

62,160

25,200

69,930

15,840

34,965

$224,880

$454,545

It is estimated that direct labor hours worked each month will range from 24,900 to 30,900 hours.

During October, 24,900 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: supervision $7,330, depreciation $5,590, insurance $2,366, rent $2,100, and property taxes $1,320.

Variable overhead costs: indirect labor $12,434, indirect materials, $6,494, repairs $3,921, utilities $4,734, and lubricants $2,554

Packaging Department
Monthly Manufacturing Overhead Flexible Budget
For the Year 2012
Activity level
Direct labor hoursª
Variable costs
Indirect labor
Indirect materials (
Repairs
Utilities
Lubricants
Total variable costs
Fixed costs
Supervision
Depreciation
Insurance .......
Rent ....... .......... ......
Property taxes .......
Total fixed costs .......
Total costs....... ..........

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(a)

Cook Company estimates that 388,500 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

$87,960

Indirect labor

$178,710

Depreciation

67,080

Indirect materials

108,780

Insurance

28,800

Repairs

62,160

Rent

25,200

Utilities

69,930

Property taxes

15,840

Lubricants

34,965

$224,880

$454,545

It is estimated that direct labor hours worked each month will range from 24,900 to 30,900 hours.

During October, 24,900 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: supervision $7,330, depreciation $5,590, insurance $2,366, rent $2,100, and property taxes $1,320.

Variable overhead costs: indirect labor $12,434, indirect materials, $6,494, repairs $3,921, utilities $4,734, and lubricants $2,554

Packaging Department
Monthly Manufacturing Overhead Flexible Budget
For the Year 2012
Activity level
Direct labor hoursª
Variable costs
Indirect labor
Indirect materials (
Repairs
Utilities
Lubricants
Total variable costs
Fixed costs
Supervision
Depreciation
Insurance .......
Rent ....... .......... ......
Property taxes .......
Total fixed costs .......
Total costs....... ..........

Warning

Don't show me this message again for the assignment

Ok

Cancel

Explanation / Answer

We will take the following assumptions for preparing the flexible budget

We will calculate per unit cost as per direct labor for variable cost

The fixed cost is given on annual basis will be divided for by 12 to get monthly budget amount

The calculations of standard variable and fixed cost expenses

Budgeted manufacturing overhead cost data of packaging department

particulars

direct labor hours

Budgeted amount

standard per unit cost

a

b

C= b/a

Variable cost

Indirect labor

388500

$178,710

$0.46

Indirect materials

388500

108,780

$0.28

Repairs

388500

62,160

$0.16

Utilities

388500

69,930

$0.18

Lubricants

388500

34,965

$0.09

Total variable cost

388500

$454,545

$1.17

standard Fixed Overhead Costs per month

per annum

per month

a

b= a/12

Supervision

$87,960

$7,330

Depreciation

67,080

$5,590

Insurance

28,800

$2,400

Rent

25,200

$2,100

Property taxes

15,840

$1,320

$224,880

$18,740

The flexible budget for the October is calculated below

Cook Company

Packaging department

Manufacturing overhead

Flexible budget for the month of october,2014

Budget

Actual

variance

Activity level

variable cost per unit

29400

29400

Variable cost

Indirect labor

0.46

13524

12434

1090

Indirect materials

0.28

8232

6494

1738

Repairs

0.16

4704

3921

783

Utilities

0.18

5292

4734

558

Lubricants

0.09

2646

2554

92

Total variable cost

34398

30137

4261

Fixed cost

Supervision

7330

7330

Depreciation

5590

5590

Insurance

2400

2400

Rent

2100

2100

Property taxes

1320

1320

Total fixed cost

18740

18740

Total cost

53138

48877

4261

Budgeted manufacturing overhead cost data of packaging department

particulars

direct labor hours

Budgeted amount

standard per unit cost

a

b

C= b/a

Variable cost

Indirect labor

388500

$178,710

$0.46

Indirect materials

388500

108,780

$0.28

Repairs

388500

62,160

$0.16

Utilities

388500

69,930

$0.18

Lubricants

388500

34,965

$0.09

Total variable cost

388500

$454,545

$1.17

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