ACC 2020 SPRING SEMESTER 2020

CHAPTER 10 HOMEWORK PROBLEM

DUE DATE: Monday, April 13 at 11:59PM

Osborn Corporation manufactures outdoor play equipment. They developed the following budget information related specifically to the manufacturing overhead costs in the year 2020:

Variable Costs	Rate per Direct Labor Hour		Fixed Costs	Amount per Year
Indirect materials	$ 0.85		Rent	$ 180,000
Indirect labor	1.05		Property tax	102,000
Factory maintenance	0.40		Depreciation	90,000
Factory utilities	0.50		Insurance	45,000

This budget was prepared on the assumption that Osborn would incur a total of 600,000 direct labor hours in 2020. In the month of June, Wasson incurred 48,000 direct labor hours. For that level of activity in June, Osborn computed their actual costs to be:

Variable Costs (per direct labor hour):
Indirect materials	$ 0.88
Indirect labor	1.02
Factory maintenance	0.50
Factory utilities	0.54
Fixed Costs	Same as budgeted

REQUIRED:

1. Prepare a manufacturing overhead flexible budget for the month of June, with production levels ranging between 45,000 and 60,000 direct labor hours per month. Use increments of 5,000 direct labor hours.
2. Prepare a flexible budget report for June comparing actual results with their budget data for the month, based on the flexible budget.