Problem 10-1A

Bumblebee Company estimates that 406,200 direct labor hours will be worked during the coming year, 2017, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs				Variable Overhead Costs
Supervision		$87,600		Indirect labor		$162,480
Depreciation		69,480		Indirect materials		105,612
Insurance		27,960		Repairs		73,116
Rent		27,480		Utilities		101,550
Property taxes		21,240		Lubricants		24,372
		$233,760				$467,130

It is estimated that direct labor hours worked each month will range from 25,600 to 31,900 hours. During October, 25,600 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,300, Depreciation $5,790, Insurance $2,300, Rent $2,290, and Property taxes $1,770. Variable overhead costs: Indirect labor $11,340, Indirect materials, $6,306, Repairs $4,538, Utilities $6,780, and Lubricants $1,826.

(b) Prepare a flexible budget report for October. (List variable costs before fixed costs.)

Budget BUMBLEBEE COMPANY Packaging Department Manufacturing overhead Flexible Budget Report For the Month Ended October 31, 2017 Actual Costs Difference Favorable Unfavorable Neither Favorable nor Unfavorable