Question
I need an explanation and help with the answers Swifty Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result,
I need an explanation and help with the answers
Swifty Company manufactures tablecloths. Sales have grown rapidly over the past 2 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, which is based on an activity index of direct labor hours.
Variable costs
Rate per Direct
Labor Hour
Annual Fixed Costs
Indirect labor $0.44 Supervision $42,000 Indirect materials 0.54 Depreciation 19,080 Factory utilities 0.34 Insurance 13,920 Factory repairs 0.24 Rent 22,920
The master overhead budget was prepared on the expectation that475,900direct labor hours will be worked during the year. In June,39,200direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variableper direct labor hour:indirect labor $0.47, indirect materials $0.51, factory utilities $0.36, and factory repairs $0.29.
Fixed:same as budgeted.
Activity Level
Depreciation
Direct Labor
Direct Labor Hours
Direct Materials
Factory Repairs
Factory Utilities
Fixed Costs
Indirect Labor
Indirect Materials
Insurance
Rent
Supervision
Total Costs
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