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 |
|
$0.40 |
|
Supervision |
|
$47,040 |
| Indirect materials |
|
0.54 |
|
Depreciation |
|
20,280 |
| Factory utilities |
|
0.30 |
|
Insurance |
|
12,480 |
| Factory repairs |
|
0.23 |
|
Rent |
|
30,000 |
The master overhead budget was prepared on the expectation that 482,200 direct labor hours will be worked during the year. In June, 43,100 direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variable—per direct labor hour: indirect labor $0.42, indirect materials $0.51, factory utilities $0.33, and factory repairs $0.28.
Fixed: same as budgeted.
 |
(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 40,900 to 53,500 direct labor hours. Use increments of 4,200 direct labor hours. (List variable costs before fixed costs.)
ZELMER COMPANY
Monthly Manufacturing Overhead Flexible Budget
Ironing Department
For the Year 2017 |
|
|
|
