Hass Company estimates that 360,000 direct labor hours will be worked during the coming year, 2011, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, shown on the next page, are computed for the year.

It is estimated that direct labor hours worked each month will range from 27,000 to
36,000 hours.
During October, 27,000 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,500, Depreciation $5,000, Insurance $2,470, Rent $2,000, and Property taxes $1,500.
Variable overhead costs: Indirect labor $10,360, Indirect materials, $6,400, Repairs $4,000, Utilities $5,700, and Lubricants $1,640.

Instructions
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2011.
(b) Prepare a flexible budget report for October.
(c) Comment on management's efficiency in controlling manufacturing overhead costs in October.

Fixed Overhead Costs Supervision Depreciation Insurance Rent Property taxes 90,000 60,000 30,000 24,000 18,000 $222,000 Variable Overhead Costs Indirect labor Indirect materials Repairs Utilities Lubricants $126,000 90,000 54,000 72,000 18,000 360,000