Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past

Question

Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2017. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours.

Variable costs
Rate per Direct
Labor Hour
Annual Fixed Costs
Indirect labor $0.44 Supervision $42,000
Indirect materials 0.54 Depreciation 19,080
Factory utilities 0.34 Insurance 13,920
Factory repairs 0.24 Rent 22,920

The master overhead budget was prepared on the expectation that 475,900 direct labor hours will be worked during the year. In June, 39,200 direct labor hours were worked. At that level of activity, actual costs were as shown below.

Variable—per direct labor hour: indirect labor $0.47, indirect materials $0.51, factory utilities $0.36, and factory repairs $0.29.

Fixed: same as budgeted.

[Collapse question part]

(a) & (b)

(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 37,300 to 51,400 direct labor hours. Use increments of 4,700 direct labor hours. (List variable costs before fixed costs.)
(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.

Problem 22-2A (Part Level Submission) Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2017. The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours. Rate per Direct Labor Hour Annual Fixed Costs Variable costs Indirect labor Indirect material Factory utilities Factory repairs $42,000 19,080 13,920 22,920 $0.44 Supervision 0.54 Depreciation 0.34 Insurance 0.24 Rent The master overhead budget was prepared on the expectation that 475,900 direct labor hours will be worked during the year. In June, 39,200 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variable-per direct labor hour: indirect labor $0.47, indirect materials $0.51, factory utilities $0.36, and factory repairs $o.29 Fixed: same as budgeted.

Explanation / Answer

Requirement a) Monthly Manufacturing Overhead Flexible budget for the year ending December 31, 2017 Production Level Range Rate per DLH 37300 42000 46700 51400 Variable Overhead Indirect labor 0.44 16412 18480 20548 22616 Indirect Materials 0.54 20142 22680 25218 27756 Factory utilties 0.34 12682 14280 15878 17476 Factory Repairs 0.24 8952 10080 11208 12336 Total Variable Overhead 58188 65520 72852 80184 Fixed overhead Supervision 42000 42000 42000 42000 Depreciation 19080 19080 19080 19080 Insurance 13920 13920 13920 13920 Rent 22920 22920 22920 22920 Total fixed overhead 97920 97920 97920 97920 Total Manufacturing overhead 156108 163440 170772 178104 Requirement b Budget report for June comparing actual result with Budget data Budget Data Actual results Difference Rate per DLH 39200 Rate per DLH 39200 Variable Overhead Indirect labor 0.44 17248 0.47 18424 -1176 Unfavourable Indirect Materials 0.54 21168 0.51 19992 1176 Unfavourable Factory utilties 0.34 13328 0.36 14112 -784 Unfavourable Factory Repairs 0.24 9408 0.29 11368 -1960 Unfavourable Total Variable Overhead 61152 63896 -2744 Unfavourable Fixed overhead Supervision 42000 42000 0 Depreciation 19080 19080 0 Insurance 13920 13920 0 Rent 22920 22920 0 Total fixed overhead 97920 97920 0 Total Manufacturing overhead 159072 161816 -2744 Unfavourable

Related Questions

Navigate

• Browse (All)
• Browse Z
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.