Finesse Company manufactures tablecloths. Sales have grown rapidly over the past two years.

As a result, the president has installed a budgetary control system for 2020. The following data

were used in developing the master manufacturing overhead budget for the ironing department.

The budget is based on an activity index of direct labour hours.

Variable Costs Rates per Direct Labour Hour

Indirect labour $0.50

Indirect materials 0.75

Factory utilities 0.45

Factory repairs 0.25

Annual Fixed Costs

Supervision $45,000

Depreciation 20,000

Insurance 15,000

Rent 30,000

The company prepared the master overhead budget on the expectation that 600,000

direct labour hours would be worked during the year. In June, 48,000 direct labour

hours were worked. At that level of activity, actual costs were as follows:

1. Variable, per direct labour hourindirect labour $0.53; indirect materials $0.70;

factory utilities $0.47; and factory repairs $0.29.

2. Fixedsame as budgeted.

Instructions

(c)Were costs effectively controlled? Explain.

(d)State the formula for calculating the total budgeted costs for Finesse Company.