Problem 22-1A Fixed Overhead Costs Variable Overhead Costs $94,560 $190,750 75,7

Question

Problem 22-1A

Fixed Overhead Costs

Variable Overhead Costs

$94,560

$190,750

75,720

99,190

33,000

68,670

26,160

91,560

21,600

38,150

$251,040

$488,320

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

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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)

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Problem 22-1A

Cook Company estimates that 381,500 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

$94,560

Indirect labor

$190,750

Depreciation

75,720

Indirect materials

99,190

Insurance

33,000

Repairs

68,670

Rent

26,160

Utilities

91,560

Property taxes

21,600

Lubricants

38,150

$251,040

$488,320

It is estimated that direct labor hours worked each month will range from 21,600 to 33,000 hours.

During October, 21,600 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: supervision $7,880, depreciation $6,310, insurance $2,704, rent $2,180, and property taxes $1,800.

Variable overhead costs: indirect labor $11,784, indirect materials, $5,208, repairs $3,845, utilities $5,609, and lubricants $2,409.

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   Prepare a monthly manufacturing overhead flexible budget for each increment of 3,800 direct labor hours over the relevant range for the year ending December 31, 2014. (List variable costs before fixed costs.)

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

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

$

$

$

$

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

$

$

$

$

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   Prepare a flexible budget report for October. (List variable costs before fixed costs.)

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)

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

$

$

$

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

FUN

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

    Activity Level    Depreciation    Direct Labor    Direct Labor Hours    Direct Materials    Fixed Costs    Indirect Labor    Indirect Materials    Insurance    Lubricants    Property Taxes    Rent    Repairs    Supervision    Total Costs    Total Fixed Costs    Total Variable Costs    Utilities    Variable Costs    

FUN

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

FUN

Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsInsuranceLubricantsProperty TaxesRentRepairsSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs

$

$

$

FUN

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Explanation / Answer

Cook Company

Manufacturing overhead flexible budget

Activity level ( Direct labor hours) 21,600 25,400 29,200 33,000 Variable overhead costs Indirect labor 10,800 12,700 14,600 16,500 Indirect materials 5,616 6,604 7,592 8,580 Repairs 3,888 4,572 5,256 5,940 Utilities 5,184 6,096 7,008 7,920 Lubricants 1,080 1,270 1,460 1,650 Total variable overhead costs 26,568 31,242 35,916 40,590 Fixed overhead costs Supervision 7,880 7,880 7,880 7,880 Depreciation 6,310 6,310 6,310 6,310 Insurance 2,750 2,750 2,750 2,750 Rent 2,180 2,180 2,180 2,180 Property tax 1,800 1,800 1,800 1,800 Total fixed overhead cost 20,920 20,920 20,920 20,920 Total overhead cost 47,488 52,162 56,836 61,510

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