Alcore Company estimates that 240,000 direct labour hours will be worked in the assembly department during 2012. Based on that, the following budgeted manufacturing overhead data are calculated:

It is estimated that the direct labour hours worked each month will range from 18,000 to 24,000 hours. During January, 20,000 direct labour hours were worked and the following overhead costs were incurred:

Instructions
(a) Prepare a monthly flexible manufacturing overhead budget for each increment of 2,000 direct labour hours (DLH) over the relevant range for the year ending December 31, 2012.
(b) Prepare a manufacturing overhead budget report for January.
(c) Comment on management's efficiency in controlling the manufacturing overhead costs in January

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Variable Overhead Costs Fixed Overhead Costs Indirect labour Indirect materials Repairs Utilities Lubricants 72,000 48,000 36,000 26,400 9,600 $192,000 Supervision Depreciation Insurance Rent Property taxes $ 75,000 30,000 12,000 9,000 6,000 $132,000 Variable Overhead Costs Fixed Overhead Costs Indirect labour Indirect materials Repairs Utilities Lubricants 6,300 3,800 2,700 1,900 830 $15,530 Supervision Depreciation Insurance Rent Property taxes 6,250 2,500 1,000 850 500 $11,100