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Osborn Corporation manufactures outdoor play equipment. They developed the following budget information related specifically to the manufacturing overhead costs in the year 2020: Variable Costs
Osborn Corporation manufactures outdoor play equipment. They developed the following budget information related specifically to the manufacturing overhead costs in the year 2020: Variable Costs Fixed Costs Amount per Year Indirect materials Indirect labor Factory maintenance Factory utilities Rate per Direct Labor Hour $ 0.85 1.05 0.40 0.50 Rent Property tax Depreciation Insurance $ 180,000 102,000 90,000 45,000 This budget was prepared on the assumption that Osborn would incur a total of 600,000 direct labor hours in 2020. In the month of June, Wasson incurred 48,000 direct labor hours. For that level of activity in June, Osborn computed their actual costs to be: Variable Costs (per direct labor hour): Indirect materials Indirect labor Factory maintenance Factory utilities Fixed Costs $ 0.88 1.02 0.50 0.54 Same as budgeted REQUIRED: 1. Prepare a manufacturing overhead flexible budget for the month of June, with production levels ranging between 45,000 and 60,000 direct labor hours per month. Use increments of 5,000 direct labor hours. 2. Prepare a flexible budget report for June comparing actual results with their budget data for the month, based on the flexible budget
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