P22.1A Prepare flexible manufacturing overhead budget Bumblebee Company estimates that 300.000 direct labor hours will be worked during the coming year, 2017 in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data shown below. are computed for the year. Fixed Overhead Costs Supervision $96,000 Depreciation 72,000 Insurance 30,000 Rent 24,000 Property taxes 18.000 $240,000 Variable Overhead Costs Indirect labor $126,000 Indirect materials 90,000 Repairs 69,000 Utilities 72,000 Lubricants 18,000 $375,000 It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours During October 27,000 direct labor hours were worked and the following overhead costs were incurred Fixed overhead costs: supervision $8,000, depreciation $6,000, insurance $2,460, rent $2,000, and property taxes $1,500. Variable overhead costs: indirect labor $12,432, indirect materials $7,680, repairs $6,100, utilities $6,840, and lubricants $1,920. Instructions (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2017 (b) Prepare a flexible budget report for October (c) Comment on management's efficiency in controlling manufacturing overhead costs in October (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2017 BUMBLEBEE COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2017 Activity level Direct labor hours 30.000 27.000 38.000 33.000 $ $ $ $ $ 5 $ Variable costs Indirect labor ($0.42) Indirect materials (50.30) Repairs ($0.23) Utilities ($0.24) Lubricants ($0.06) Total variable costs ($1.25) 11,340 8.100 6210 6.480 1.620 33.750 12.600 9.000 6.900 7.2001 1.800 37.500 13 360 9 .900 7,590 7.920 1.980 41,250 15 120 10.800 8280 8.840 2160 45,000 $ $ Fixed costs Supervision Depreciation Insurance Rent Property taxes Total fixed costs 8,000 6,000 2,500 2,000 1,500 20,000 $ $ $ $ $ 8,000 6,000 2,500 2.000 1,500 20,000 $ $ $ 1 $ $ 8.000 6.000 2.500 2.000 1.500 20.000 8,000 6.000 2.500 2.000 1,500 20.000 $ 65.000 61.250 $ $ 53,750 $ 57,500 Total costs /(b) Prepare a flexible budget report for October BUMBLEBEE COMPANY Packaging Department Manufacturing Overhead Flexible Budget Report For the Month Ended October 31, 2017 Difference Budget at Actual Costs Favorable F 27,000 DLH Direct labor hours 27,000 DLH Unfavorable U Variable costs Indirect labor ($0.42) Indirect materials (S0.30) Repairs ($0.23) Utilities ($0.24) Lubricants ($0.06) Total variable costs ($1.25) $11,340 8.100 6.210 6.480 1.620 33,750 $12.432 7,680 6.100 6.840 1,920 34,972 $1,092 420 110 360 300 1.222 U F F TU TU 0 Fixed costs Supervision Depreciation Insurance Rent Property taxes Total fixed costs 8.000 6,000 2,500 2,000 1.500 20.000 8.000 6,000 2,460 2.000 1.500 19.960 V 40 0 0 4 0 F $53.750 $54.932 $1,182 Total costs (c) Comment on management's efficiency in controlling manufacturing overhead costs in October Response: After you have completed P22-1A consider the following additional question. 1. Assume that during October, the actual direct labor hours worked changed to 27,500 hours. In addition, actual variable overhead costs incurred for indirect labor and indirect materials also changed to $13,500 and $8,200 respectively. Revise the flexible budget report for October. You can copy any of the templates above, but show work for both (6) Prepare a flexible budget report for October. BUMBLEBEE COMPANY Packaging Department Manufacturing Overhead Flexible Budget Report For the Month Ended October 31, 2017 Difference Budget at Actual Costs Favorable F Direct labor hours 1 Unfavorable U Variable costs Indirect labor ($0.42) Indirect materials ($0.30) Repairs ($0.23) Utilities ($0.24) Lubricants ($0.06) Total variable costs ($1.25) Fixed costs Supervision Depreciation Insurance Rent Property taxes Total fixed costs Total costs (c) Comment on management's efficiency in controlling manufacturing overhead costs in October