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 40 Supervision $40,800 Indirect materials 0 50 Depreciation 14,400 Factory utilities 0 30 Insurance 12,000 Factory repairs 0 20 Rent 22,800 The master overhead budget was prepared on the expectation that 475,000 direct labor hours will be worked during the year In June, 37,000 direct labor hours were worked At that level of activity, actual costs were as shown below Variableper direct labor hour indirect labor $0 42, indirect materials $0 49, factory utilities $0 32, and factory repairs $0 24 Fixed same as budgeted (a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 35,000 to 47,000 direct labor hours Use increments of 4,000 direct labor hours (List variable costs before fixed costs ) ZELMER COMPANY Monthly Manufacturing Overhead Flexible Budget Ironing Department For the Year 2017 Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs $ $ $ $ Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable 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 ) ZELMER COMPANY Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2017 Difference Budget Actual Costs Favorable Unfavorable Neither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs $ $ $ FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs $ $ $ FavorableUnfavorableNeither Favorable nor Unfavorable 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 ) The formula is $ total variable costs of $ per direct labor hour

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 11, 2024

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

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	$0.40	Supervision	$40,800
Indirect materials	0.50	Depreciation	14,400
Factory utilities	0.30	Insurance	12,000
Factory repairs	0.20	Rent	22,800

The master overhead budget was prepared on the expectation that 475,000 direct labor hours will be worked during the year. In June, 37,000 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variableper direct labor hour: indirect labor $0.42, indirect materials $0.49, factory utilities $0.32, and factory repairs $0.24. Fixed: same as budgeted.

(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2017, assuming production levels range from 35,000 to 47,000 direct labor hours. Use increments of 4,000 direct labor hours. (List variable costs before fixed costs.)

ZELMER COMPANY Monthly Manufacturing Overhead Flexible Budget Ironing Department For the Year 2017
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs	$	$	$	$
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable 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.)

ZELMER COMPANY Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2017
			Difference
	Budget	Actual Costs	Favorable Unfavorable Neither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs	$	$	$	FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs				FavorableUnfavorableNeither Favorable nor Unfavorable
Activity LevelDepreciationDirect LaborDirect Labor HoursDirect MaterialsFactory RepairsFactory UtilitiesFixed CostsIndirect LaborIndirect MaterialsInsuranceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsVariable Costs	$	$	$	FavorableUnfavorableNeither Favorable nor Unfavorable

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.)

The formula is

+ total variable costs of $

per direct labor hour.