Problem 24-2A

Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2017. 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 that 475,900 direct labor hours will be worked during the year. In June, 39,200 direct 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.

(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 37,300 to 51,400 direct labor hours. Use increments of 4,700 direct labor hours. (List variable costs before fixed costs.)

(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.)

State the formula for computing the total budgeted costs for the Ironing Department. (Round variable cost per unit to 2 decimal places, e.g. 1.55.)