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Accounting Help Electric Company estimates that 360,000 direct labor hours will be worked during 2022 in the Fixing Department. On this basis, the following budgeted
Accounting Help
Electric Company estimates that 360,000 direct labor hours will be worked during 2022 in the Fixing Department. On this basis, the following budgeted manufacturing overhead data are computed.
Variable Overhead Costs | |
Indirect labor | $72,000 |
Indirect material | 54,000 |
Repairs | 36,000 |
Utilities | 28,800 |
Lubricants | 18,000 |
Total | $208,800 |
Fixed Overhead Costs (annually) | |
Supervision | $75,000 |
Depreciation | 30,000 |
Insurance | 12,000 |
Rent | 9,000 |
Property taxes | 6,000 |
Total | $132,000 |
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.
Variable Overhead Costs | |
Indirect labor | $6,300 |
Indirect material | 2,500 |
Repairs | 2,700 |
Utilities | 1,900 |
Lubricants | 830 |
Total | $14,230 |
Fixed Overhead Costs | |
Supervision | $6,250 |
Depreciation | 2,500 |
Insurance | 1,000 |
Rent | 850 |
Property taxes | 500 |
Total | $11,100 |
Instructions:
- 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, 2022.
- Prepare a manufacturing overhead budget report for January.
- Comment on managements efficiency in controlling manufacturing overhead costs in January.
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