Flexible Budget Application The cutting department of Liberty Manufacturing Comp
ID: 2514380 • Letter: F
Question
Flexible Budget Application
The cutting department of Liberty Manufacturing Company operated during September 2016 with the following manufacturing overhead cost budget based on 6,000 hours of monthly productive capacity:
The cutting department was operated for 5,580 hours during September and incurred the following manufacturing overhead costs:
Using a flexible budgeting approach, prepare a performance report for the cutting department for September 2016, comparing actual overhead costs with budgeted overhead costs for 5,580 hours. Separate overhead costs into variable and fixed components and show the amounts of any variances between actual and budgeted amounts.
Do not use negative signs with your answers below.
Do not round until your final answer. Round answers to nearest whole number, if applicable.
Select either U for Unfavorable or F for Favorable using the drop down box next to each of your variance answers.
Budget
(5,580 hours)
Liberty Manufacturing CompanyCutting Department
Overhead Budget (6,000 Hours)
For the Month of September 2016 Variable costs: Factory supplies $48,000 Indirect labor 72,000 Utilities (usage charge) 36,000 Patent royalties on secret process 144,000 Total variable overhead $300,000 Fixed costs: Supervisory salaries 96,000 Depreciation on factory equipment 140,000 Factory taxes 40,000 Factory insurance 24,000 Utilities (base charge) 32,000 Total fixed overhead 332,000 Total manufacturing overhead $632,000 CUCK HERE TO REVIEW LEARNING CBJECTIVES QUESTION 4 Neenmplecs Pints out at a.c Flexible Budget Application FLg The cutting department efLiberty Meufacturing Compeny operated during September 2016 with the following manufacturing overhead cost budget based on 6,000 hours of monthly producthe capacity. Cutting Department Overhead Budget (6,000 Hours) For the Month of September 2016 Verisole costs Factory suppies Indinect labar Ulides(usag charge Parent royaites an secret process4 48 000 2 000 36.000 Total variablo cherhoad Fied costs 95,000 40,000 40,000 24,000 on rectory equipme4 Factory t5ies Factory insurance Toca fxed avernead Total manufbcuring overhesd The cutting department was operated tor 5,500 hours during September and incurred the following manufacturing overhead costs: Factory uppl es Indirect lebor Utiities (usage factor) Utiities(hase fattor) Pacen roalties Buperisory salaris Depreclecieon on factory equipmen Factory texes Factory Insurance 541 400 08 200 38,100 32.000 6 000 40 000 23000 overhesd incurred $622,0o Using a flexible budgeting approach prepare a performance report for the cutting department for September 2016, comparing actual overhead costs with budgeted overhead costs for 5.580 hours. Separate overhead costs Into varlable and fixed comconents and show the amounts of any variances between actual and budgeted amounts Do notuse negathe signs with your answers below. Do not round until your final answer. Round answers to nearest whole number, if applicable. Select either U for Untavorable or Ffor Favorable using the drop down box next to each of your variance answers. Liberty Manufacturing Company Polishing Department Performance Report- Manutacturing Overhead For the Month Ended September 30, 2016 Budget (5,580 haurs) Actual Costs erible costs Foctory suppies ndirect labor iides Petent royelties Total varisblecverhed Flhoed costs: supenvsory salaries Deprecist on on equpment Facory ta Factory Insurance kiities Toral fooed cuerhead Total cuhead costs Check
Explanation / Answer
Answer
Total cost for 6000 hours (A)
variable cost per hour (A/6000)
Variable costs:
Factory supplies
$48000
$8
Indirect labor
$72000
$12
Utilities
$36000
$6
Patent royalties
$144000
$24
Total variable overhead
$300,000
$50
Liberty Manufacturing Company
Polishing Department
Performance Report - Manufacturing Overhead
For the Month Ended September 30, 2016
Actual Costs
Budget
Variances
(5,580 hours) [5580 hours x Variable cost per hour calculated above]
Variable costs:
Factory supplies
$ 41,400.00
$ 44,640.00
3240
Favourable
Indirect labor
$ 68,200.00
$ 66,960.00
1240
Unfavourable
Utilities
$ 38,100.00
$ 33,480.00
4620
Unfavourable
Patent royalties
$ 1,35,000.00
$ 1,33,920.00
1080
Unfavourable
Total variable overhead
$ 2,82,700.00
$ 2,79,000.00
3700
Unfavourable
Fixed costs:
Supervisory salaries
$ 96,000.00
$ 96,000.00
0
None
Depreciation on equipment
$ 1,40,000.00
$ 1,40,000.00
0
None
Factory taxes
$ 44,400.00
$ 40,000.00
4400
Unfavourable
Factory insurance
$ 27,000.00
$ 24,000.00
3000
Unfavourable
Utilities
$ 32,000.00
$ 32,000.00
0
None
Total fixed overhead
$ 3,39,400.00
$ 3,32,000.00
7400
Unfavourable
Total overhead costs
$ 6,22,100.00
$ 6,11,000.00
11100
Unfavourable
Total cost for 6000 hours (A)
variable cost per hour (A/6000)
Variable costs:
Factory supplies
$48000
$8
Indirect labor
$72000
$12
Utilities
$36000
$6
Patent royalties
$144000
$24
Total variable overhead
$300,000
$50
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