Greish Company estimates that 240,000 direct labor hours will be worked during 2002 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.

It is estimated that direct labor hours worked each month will range from 18,000 to 24,000 hours.
During January, 20,000 direct labor 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 labor hours over the relevant range for the year ending December 31, 2002.

(b) Prepare a manufacturing overhead budget report for January, assuming 20,500 direct labor hours were expected.

(c) Comment on management's efficiency in controlling manufacturing over- head costs in January.

Transcribed Image Text:

Variable Overhead Costs Indirect labor Indirect materials Repairs Utilities Lubricants Fixed Overhead Costs $ 72,000 Supervision $ 72,000 48,000 Depreciation 36,000 24,000 Insurance 9,600 19,200 Rent 7,200 9,600 Property taxes 6,000 $172,800 $130,800