Question 1 Bumblebee Company estimates that 385,800 direct labor hours will be w

Question

Question 1 Bumblebee Company estimates that 385,800 direct labor hours will be worked during the coming year, 2017, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs $185,184 100,308 61,728 57,870 30,864 $435,954 Supervision S91,080 Indirect labor Insurance Rent Property taxes 74,520 Indirect materials 24,840 Repairs 22,560 Utlities 17,880 Lubricants $230,880 It is estimated that direct lahor hours worked each month wll range from 28,700 to 39,200 hours. During October, 28,700 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,590, Deprediation $6,210, Insurance $2,015, Rent 51,880, and Property taxes s1,490 Vanable overhead costs: Indirect labor $14,755, Indirect materials, $7,042, Repairs $4,532, Utilities $4,725, and Lubncants s2,596.

Explanation / Answer

1) activity level Direct labor hours 28,700 32,200 35,700 39,200 variable costs Indirect labor 0.48 13776 15456 17136 18816 indirect materials 0.26 7462 8372 9282 10192 repairs 0.16 4592 5152 5712 6272 utilities 0.15 4305 4830 5355 5880 lubricants 0.08 2296 2576 2856 3136 tota variable cost 1.13 32431 36386 40341 44296 Fixed expenses Supervision 7590 7590 7590 7590 Depreciation 6210 6210 6210 6210 insurance 2070 2070 2070 2070 Rent 1880 1880 1880 1880 property taxes 1490 1490 1490 1490 total fixed expenses 19240 19240 19240 19240 total cost 51671 55626 59581 63536 2) budget Actual difference activity level Direct labor hours 28,700 28,700 variable costs Indirect labor 0.48 13,776 14,756 980 U indirect materials 0.26 7462 7,042 420 F repairs 0.16 4592 4,532 60 F utilities 0.15 4305 4,725 420 U lubricants 0.08 2296 2,596 300 U tota variable cost 1.13 32431 33651 1220 U Fixed expenses Supervision 7590 7,590 0 N Depreciation 6210 6,210 0 N insurance 2070 2,015 55 F Rent property taxes 1880 1,880 0 N property taxes 1490 1,490 0 N total fixed expenses 19240 19,185 55 F total cost 51671 52836 1165 U

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