Bumblebee Company estimates that 334,300 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 | |||||
| Supervision | $92,040 | Indirect labor | $160,464 | |||
| Depreciation | 77,400 | Indirect materials | 93,604 | |||
| Insurance | 28,800 | Repairs | 53,488 | |||
| Rent | 26,640 | Utilities | 50,145 | |||
| Property taxes | 18,840 | Lubricants | 20,058 | |||
| $243,720 | $377,759 | |||||
It is estimated that direct labor hours worked each month will range from 21,300 to 33,300 hours.
During October, 21,300 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,670, Depreciation $6,450, Insurance $2,355, Rent $2,220, and Property taxes $1,570.
Variable overhead costs: Indirect labor $11,294, Indirect materials, $5,584, Repairs $3,358, Utilities $3,645, and Lubricants $1,598.
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 4,000 direct labor hours over the relevant range for the year ending December 31, 2017. (List variable costs
(b) Prepare a flexible budget report for October
| BUMBLEE BEE COMPANY | |||||||||
| Packaging Department | |||||||||
| Monthly Manufacturing Overhead Flexible Budget | |||||||||
| For the Year 2017 | |||||||||
| Activity level | |||||||||
| Direct labor hours | 21,300 | 25,300 | 29,300 | 33,300 | |||||
| Variable costs | |||||||||
| Indirect labor | 0.48 | $ 10,224 | $ 12,144 | $ 14,064 | $ 15,984 | ||||
| Indirect materials |
0.28 | $ 5,964 | $ 7,084 | $ 8,204 | $ 9,324 | ||||
| Repairs | 0.16 | $ 3,408 | $ 4,048 | $ 4,688 | $ 5,328 | ||||
| Utilities | 0.15 | $ 3,195 | $ 3,795 | $ 4,395 | $ 4,995 | ||||
| Lubricants | 0.06 | $ 1,278 | $ 1,518 | $ 1,758 | $ 1,998 | ||||
| Total variable costs ($1.20) | 24,069 | 28,589 | 33,109 | 37,629 | |||||
| Fixed costs | |||||||||
| Supervision | $ 7,670 | $ 7,670 | $ 7,670 | $ 7,670 | |||||
| Depreciation | $ 6,450 | $ 6,450 | $ 6,450 | $ 6,450 | |||||
| Insurance | $ 2,400 | $ 2,400 | $ 2,400 | $ 2,400 | |||||
| Rent | $ 2,220 | $ 2,220 | $ 2,220 | $ 2,220 | |||||
| Property taxes | $ 1,570 | $ 1,570 | $ 1,570 | $ 1,570 | |||||
| Total fixed costs | 20,310 | # | 20,310 | – | 20,310 | – | 20,310 | ||
| Total costs | $ 44,379 | $ 48,899 | # | $ 53,419 | $- | $ 57,939 | |||
| BUMBLEE BEE COMPANY | |||||||||
| Packaging Department | |||||||||
| Manufacturing Overhead Flexible Budget Report | |||||||||
| For the Month Ended October 31, 2017 | |||||||||
| Difference | |||||||||
| Budget at | Actual Costs | Favorable F | |||||||
| Direct labor hours | 21300 | 27,000 DLH | Unfavorable U | ||||||
| Variable costs | |||||||||
| Indirect labor | 0.48 | $ 10,224 | $ 11,294 | 1070 u | 1070 u | ||||
| Indirect materials |
0.28 | $ 5,964 | 5,584 | 380 f | 380 f | ||||
| Repairs | 0.16 | $ 3,408 | 3,358 | 50 F | 50 F | ||||
| Utilities | 0.15 | $ 3,195 | 3,645 | 450 U | 450 U | ||||
| Lubricants | 0.06 | $ 1,278 | 1,598 | 320 U | 320 U | ||||
| Total variable costs ($1.20) | $ 24,069 | $ 28,589 | 4520 U | 4520 U | |||||
| 0 | |||||||||
| Fixed costs | 0 | ||||||||
| Supervision | $ 7,670 | $ 7,670 | $ – | ||||||
| Depreciation | $ 6,450 | 6,450 | $ – | ||||||
| Insurance | $ 2,400 | 2,355 | 45 F | 450 F | |||||
| Rent | $ 2,220 | 2,220 | $ – | ||||||
| Property taxes | $ 1,570 | 1,570 | $ – | ||||||
| Total fixed costs | $ 20,310 | ? | 45 F | ||||||
| $ – | |||||||||
| Total costs | $ 44,379 | $ 48,899 | # | $ 53,419 | |||||
