I. Garza and Neely CPAs, are preparing their service revenue (sales) budget for the coming year (2021). The practice is divided into the three departments: auditing, tax, and consulting. Billable hours for each department, by quarter, are provided below.

Department Quarter 1 Quarter 2 Quarter 3 Quarter 4

Auditing 2,300 1,600 2,000 2,400

Tax 3,000 2,200 2,000 2,500

Consulting 1,500 1,500 1,500 1,500

Average hourly billing rates are auditing $80, tax $90, and consulting $100.

Instructions

Prepare the service revenue (sales) budget for 2021 by listing the departments and showing for each quarter and the year in total, billable hours, billable rate, and total revenue.

II Thome Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.

Indirect labor $ 1.00

Indirect materials 0.60

Utilities 0.40

Fixed overhead costs per month are supervision $4,000, depreciation $1,200, and property taxes $800. The company believes it will normally operate in a range of 7,000 10,000 direct labor hours per month.

Instructions

Prepare a monthly manufacturing overhead flexible budget for 2021 for the expected range of activity, using increments of 1,000 direct labor hours.

IV. In the Assembly Department of Hannon Company, budgeted and actual manufacturing overhead cost for the month of April 2021 were as follows.

Budget Actual

Indirect materials $16,000 $14,300

Indirect labor $20,000 $20,600

Utilities $10,000 $10,850

Supervision $ 5,000 $ 5,000

All costs are controllable by the department manager. Prepare a responsibility report for April for the cost center.