I need to calculate the variable costs, DLH, Fixed costs and the manufacturing o

Question

I need to calculate the variable costs, DLH, Fixed costs and the manufacturing overhead rate per direct labor hour for each quarter and year-end. I've done some calculation but I believe I am missing something in the variable costs calculations with the indirect materials, indirect labor hours and maintenance. I have been multiplying the indirect costs by DLH, but some of my instructions indicate I am supposed to divide it. Not sure if I am misinterpreting or just missing a calculation altogether.

Wells Company is preparing its Master Budget for 2016 and Evan has asked you to create the Manufacturing Overhead Budget for the Sporting Goods Division. Once you have reviewed the Project resources and the below data, prepare the Manufacturing Overhead Budget for 2017, showing quarterly data. Be sure to properly express each figure in terms of units, dollars or direct labor hours (DLH).

Sporting Goods Units to be produced (by Quarter):

Q1: 70,000

Q2: 60,000

Q3: 50,000

Q4: 80,000

Direct labor: 1 hour of direct labor is required to produce one unit

Variable overhead costs per direct labor hour:

Indirect materials

$0.80

Indirect labor

$1.20

Maintenance

$0.50

Fixed overhead costs per Quarter:

Supervisory salaries

$42,000

Depreciation

$16,000

Maintenance

$12,000

Indirect materials

$0.80

Indirect labor

$1.20

Maintenance

$0.50

Explanation / Answer

Indirect materials ($.80/DLH ) it means $.80 per DLH

ACME SPORTING GOODS DIVISION MANUFACTURING OVERHEAD BUDGET FOR THE YEAR ENDED DECEMBER 31, 2016 Q1 Q2 Q3 Q4 Total DIRECT LABOR HOURS(DLH) 70,000 60,000 50,000 80,000 260,000 VARIABLE COSTS: Indirect materials ($.80/DLH) ; ($.80 x DLH) $56,000.00 $48,000.00 $40,000.00 $64,000.00 $208,000.00 Indirect labor ($1.20/DLH); /($1.20 x DLH) $84,000.00 $72,000.00 $60,000.00 $96,000.00 $312,000.00 Maintenance($.50/DLH);($.50 x DLH) $35,000.00 $30,000.00 $25,000.00 $40,000.00 $130,000.00 TOTAL VARIABLE COSTS $175,000.00 $150,000.00 $125,000.00 $200,000.00 $650,000.00 FIXED COSTS Supervisory salaries $42,000.00 $42,000.00 $42,000.00 $42,000.00 $168,000.00 Depreciation $16,000.00 $16,000.00 $16,000.00 $16,000.00 $64,000.00 Maintenance $12,000.00 $12,000.00 $12,000.00 $12,000.00 $48,000.00 TOTAL FIXED COSTS $70,000.00 $70,000.00 $70,000.00 $70,000.00 $280,000.00 MANUFACTURING OVERHEAD (MO) $245,000.00 $220,000.00 $195,000.00 $270,000.00 $930,000.00 MANUFACTURING OVERHEAD RATE PER DIRECT LABOR HOUR (MO/DLH) = $930,000/260,000 $3.58

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