Flexible Budget

The controller for Muir Company's Salem plant is analyzing overhead in order to determine appropriate drivers for use in flexible budgeting. She decided to concentrate on the past 12 months since that time period was one in which there was little important change in technology, product lines, and so on. Data on overhead costs, number of machine hours, number of setups, and number of purchase orders are in the following table.

Month	Overhead Costs	Machine Hours	Number of Setups	Number of Purchase Orders
January	$ 32,296	1,000	20	216
February	31,550	930	18	250
March	36,280	1,100	21	300
April	36,867	1,050	23	270
May	36,790	1,170	22	285
June	37,800	1,200	25	240
July	40,024	1,235	27	237
August	39,256	1,190	24	303
September	33,800	1,070	20	255
October	33,779	1,210	22	195
November	37,225	1,207	23	270
December	27,500	1,084	15	150
Totals	$423,167	13,446	260	2,971

Required:

1. Calculate an overhead rate based on machine hours using the total overhead cost and total machine hours. (Round the overhead rate to the nearest cent and predicted overhead to the nearest dollar.) Use this rate to predict overhead for each of the 12 months.

Overhead rate: $fill in the blank dec78dfaa04302e_1 per machine hour

Feedback

The overhead budget shows the expected cost of all indirect manufacturing items. It is based on variable and fixed overhead used in production. Decide which costs are fixed and which are variable and calculate.

Prepare a flexible budget for overhead for the 12 months. If there is no variance, enter "0" for the amount and select "NA" in the last column. Enter all amounts as postive values.

Muir Company Flexible Budget for Overhead
Month	Predicted Overhead	Actual Overhead	Variance
January	$fill in the blank 4c98b4fcc015f99_1	$fill in the blank 4c98b4fcc015f99_2	$fill in the blank 4c98b4fcc015f99_3	Unfavorable
February	fill in the blank 4c98b4fcc015f99_5	fill in the blank 4c98b4fcc015f99_6	fill in the blank 4c98b4fcc015f99_7	Unfavorable
March	fill in the blank 4c98b4fcc015f99_9	fill in the blank 4c98b4fcc015f99_10	fill in the blank 4c98b4fcc015f99_11	Unfavorable
April	fill in the blank 4c98b4fcc015f99_13	fill in the blank 4c98b4fcc015f99_14	fill in the blank 4c98b4fcc015f99_15	Unfavorable
May	fill in the blank 4c98b4fcc015f99_17	fill in the blank 4c98b4fcc015f99_18	fill in the blank 4c98b4fcc015f99_19	Favorable
June	fill in the blank 4c98b4fcc015f99_21	fill in the blank 4c98b4fcc015f99_22	fill in the blank 4c98b4fcc015f99_23	Unfavorable
July	fill in the blank 4c98b4fcc015f99_25	fill in the blank 4c98b4fcc015f99_26	fill in the blank 4c98b4fcc015f99_27	Unfavorable
August	fill in the blank 4c98b4fcc015f99_29	fill in the blank 4c98b4fcc015f99_30	fill in the blank 4c98b4fcc015f99_31	Unfavorable
September	fill in the blank 4c98b4fcc015f99_33	fill in the blank 4c98b4fcc015f99_34	fill in the blank 4c98b4fcc015f99_35	Unfavorable
October	fill in the blank 4c98b4fcc015f99_37	fill in the blank 4c98b4fcc015f99_38	fill in the blank 4c98b4fcc015f99_39	Favorable
November	fill in the blank 4c98b4fcc015f99_41	fill in the blank 4c98b4fcc015f99_42	fill in the blank 4c98b4fcc015f99_43	Favorable
December	fill in the blank 4c98b4fcc015f99_45	fill in the blank 4c98b4fcc015f99_46	fill in the blank 4c98b4fcc015f99_47	Favorable
Totals	$fill in the blank 4c98b4fcc015f99_49	$fill in the blank 4c98b4fcc015f99_50	$fill in the blank 4c98b4fcc015f99_51	Unfavorable

Feedback

The overhead budget shows the expected cost of all indirect manufacturing items. It is based on variable and fixed overhead used in production. Decide which costs are fixed and which are variable and calculate.

2. Run a regression equation using only machine hours as the independent variable. Prepare a flexible budget for overhead for the 12 months using the results of this regression equation. (Round the intercept and x-coefficient to the nearest cent and predicted overhead amount to the nearest dollar.)

If there is no variance, enter "0" for the amount and select "NA" in the last column. Enter all your answers as positive amounts.

Muir Company Flexible Budget for Overhead
Month	Predicted Overhead	Actual Overhead	Variance
January	$fill in the blank bec79506efff06b_1	$fill in the blank bec79506efff06b_2	$fill in the blank bec79506efff06b_3	Favorable
February	fill in the blank bec79506efff06b_5	fill in the blank bec79506efff06b_6	fill in the blank bec79506efff06b_7	Unfavorable
March	fill in the blank bec79506efff06b_9	fill in the blank bec79506efff06b_10	fill in the blank bec79506efff06b_11	Unfavorable
April	fill in the blank bec79506efff06b_13	fill in the blank bec79506efff06b_14	fill in the blank bec79506efff06b_15	Unfavorable
May	fill in the blank bec79506efff06b_17	fill in the blank bec79506efff06b_18	fill in the blank bec79506efff06b_19	Unfavorable
June	fill in the blank bec79506efff06b_21	fill in the blank bec79506efff06b_22	fill in the blank bec79506efff06b_23	Unfavorable
July	fill in the blank bec79506efff06b_25	fill in the blank bec79506efff06b_26	fill in the blank bec79506efff06b_27	Unfavorable
August	fill in the blank bec79506efff06b_29	fill in the blank bec79506efff06b_30	fill in the blank bec79506efff06b_31	Unfavorable
September	fill in the blank bec79506efff06b_33	fill in the blank bec79506efff06b_34	fill in the blank bec79506efff06b_35	Favorable
October	fill in the blank bec79506efff06b_37	fill in the blank bec79506efff06b_38	fill in the blank bec79506efff06b_39	Favorable
November	fill in the blank bec79506efff06b_41	fill in the blank bec79506efff06b_42	fill in the blank bec79506efff06b_43	Favorable
December	fill in the blank bec79506efff06b_45	fill in the blank bec79506efff06b_46	fill in the blank bec79506efff06b_47	Favorable
Totals	$fill in the blank bec79506efff06b_49	$fill in the blank bec79506efff06b_50	$fill in the blank bec79506efff06b_51	Favorable