Flexible Overhead Budget Leno Manufacturing Company prepared the following facto
ID: 2531332 • Letter: F
Question
Flexible Overhead Budget
Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 20,000 hours of productive capacity in the department:
Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 18,000, 20,000, and 22,000 hours of production. Enter all amounts as positive numbers. Round your interim computations to the nearest cent, if required.
Variable overhead costs: Indirect factory labor $180,000 Power and light 12,000 Indirect materials 64,000 Total variable overhead cost $256,000 Fixed overhead costs: Supervisory salaries $ 80,000 Depreciation of plant and equipment 50,000 Insurance and property taxes 32,000 Total fixed overhead cost 162,000 Total factory overhead cost $418,000Explanation / Answer
Leno Manufacturing Company
Leno Manufacturing Company
Factory Overhead Cost Budget - Press Department
for the month ended November 30
Direct labor hours
18,000
20,000
22,000
variable overhead costs:
Indirect factory labor
$162,000
$180,000
$198,000
Power and Light
$10,800
$12,000
$13,200
Indirect Materials
$57,600
$64,000
$70,400
Total variable factory overhead
$230,400
$256,000
$281,600
Fixed factory overhead costs:
Supervisory Salaries
$80,000
$80,000
$80,000
Depreciation of plant and equipment
$50,000
$50,000
$50,000
Insurance and property taxes
$32,000
$32,000
$32,000
total fixed overhead cost
$162,000
$162,000
$162,000
Total factory overhead cost
$392,400
$418,000
$443,600
Computations:
Variable cost per hour –
Fixed factory overhead remain same at any level of productive capacity.
Hence, the supervisory salaries, depreciation on plant and equipment and insurance and property taxes remain constant for all levels of productive capacity.
Leno Manufacturing Company
Factory Overhead Cost Budget - Press Department
for the month ended November 30
Direct labor hours
18,000
20,000
22,000
variable overhead costs:
Indirect factory labor
$162,000
$180,000
$198,000
Power and Light
$10,800
$12,000
$13,200
Indirect Materials
$57,600
$64,000
$70,400
Total variable factory overhead
$230,400
$256,000
$281,600
Fixed factory overhead costs:
Supervisory Salaries
$80,000
$80,000
$80,000
Depreciation of plant and equipment
$50,000
$50,000
$50,000
Insurance and property taxes
$32,000
$32,000
$32,000
total fixed overhead cost
$162,000
$162,000
$162,000
Total factory overhead cost
$392,400
$418,000
$443,600
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