Overhead Budget

Johnston Company cleans and applies powder coat paint to metal items on a job-order basis. Johnston has budgeted the following amounts for various overhead categories in the coming year.

Supplies $215,000

Gas 60,000

Indirect labor 170,000

Supervision 74,000

Depreciation on equipment 46,000

Depreciation on the buliding 44,000

Rental of special equipment 11,500

Electricity (for lighting, heating, and air conditioning) 28,900

Telephone 4,100

Landscaping service 1,100

Other overhead 53,000

In the coming year, Johnston expects to powder coat 140,000 units. Each unit takes 1.4 direct labor hours. Johnston has found that supplies and gas (used to run the drying ovensall units pass through the drying ovens after powder coat paint is applied) tend to vary with the number of units produced. All other overhead categories are considered to be fixed.

Required:

1. Calculate the number of direct labor hours Johnston must budget for the coming year. Calculate the variable overhead rate. Calculate the total fixed overhead for the coming year. When required, round your answers to the nearest cent and use the rounded answers in subsequent requirements.

Direct labor hours

Variable overhead rate $ per direct labor hour

Total fixed overhead $

2. Prepare an overhead budget for Johnston for the coming year. Show the total variable overhead, total fixed overhead, and total overhead. When required, round your answers to the nearest cent.

Johnston Company

Overhead Budget

For the Coming Year

Budgeted direct labor hours

Variable overhead rate $

Budgeted variable overhead $

Budgeted fixed overhead

Total budgeted overhead $

Calculate the fixed overhead rate and the total overhead rate. If required, round your answers to the nearest cent.

Fixed overhead rate $ per direct labor hour

Total overhead rate $ per direct labor hour

3. What if Johnston had expected to make 138,000 units next year? Assume that the variable overhead per unit does not change and the total fixed overhead amounts do not change. Calculate the new budgeted direct labor hours.

Prepare a new overhead budget. If required, round your answers to the nearest cent.

Johnston Company

New Overhead Budget

For the Coming Year

Budgeted direct labor hours

Variable overhead rate $

Budgeted variable overhead $

Budgeted fixed overhead

Total budgeted overhead $

Calculate the fixed overhead rate and the total overhead rate. If required, round your answers to the nearest cent.

Fixed overhead rate $ per direct labor hour

Total overhead rate $ per direct labor hour