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Solving Accounting Principles Problems Using Microsoft Excel for Windows by Rex A Schildhouse P24-1A Malone Company estimates that 360,000 direct labor hours will be worked
| Solving Accounting Principles Problems Using Microsoft Excel for Windows by Rex A Schildhouse | ||||||||
| P24-1A Malone Company estimates that | 360,000 | direct labor hours will be worked during the coming | ||||||
| year, 2008, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data | ||||||||
| are computed for the year. | ||||||||
| Fixed Overhead Costs | Variable Overhead Costs | |||||||
| Supervision | $90,000 | Indirect labor | $126,000 | |||||
| Depreciation | 60,000 | Indirect materials | 90,000 | |||||
| Insurance | 30,000 | Repairs | 54,000 | |||||
| Rent | 24,000 | Utilities | 72,000 | |||||
| Property taxes | 18,000 | Lubricants | 18,000 | |||||
| $222,000 | $360,000 | |||||||
| 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 | Variable Overhead Costs | |||||||
| Supervision | $7,500 | Indirect labor | $10,360 | |||||
| Depreciation | 5,000 | Indirect materials | 6,400 | |||||
| Insurance | 2,470 | Repairs | 4,000 | |||||
| Rent | 2,000 | Utilities | 5,700 | |||||
| Property taxes | 1,500 | Lubricants | 1,640 | |||||
| Instructions: | ||||||||
| (a) Prepare a monthly flexible manufacturing overhead budget for each increment of | 3,000 | direct | ||||||
| labor hours over the relevant range for the year ending December 31, 2008. | ||||||||
| MALONE COMPANY | ||||||||
| Packaging Department | ||||||||
| Flexible Monthly Manufacturing Overhead Budget | ||||||||
| For the Year 2008 | ||||||||
| Activity level | ||||||||
| Direct labor hours | Number | Number | Number | Number | ||||
| Variable costs* | ||||||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Total variable costs | Formula | Formula | Formula | Formula | ||||
| Fixed costs | ||||||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Title | Amount | Amount | Amount | Amount | ||||
| Total fixed costs | Formula | Formula | Formula | Formula | ||||
| Total costs | Formula | Formula | Formula | Formula | ||||
| *Note that the per hour variable costs are computed by taking the budget amount at 360,000 | ||||||||
| hours and dividing it by 360,000. For example, indirect labor per hour is therefore $126,000 | ||||||||
| divided by 360,000 hours or $0.35 per hour. | ||||||||
| (b) Prepare a flexible budget report for October. | ||||||||
| MALONE COMPANY | ||||||||
| Packaging Department | ||||||||
| Manufacturing Overhead Budget Report (Flexible) | ||||||||
| For the Year 2008 | ||||||||
| Budgeted at | Actual Costs | Difference | ||||||
| Direct labor hours (DLH) | Amount | Amount | Favorable - Fav Unfavorable - Unf | |||||
| Variable costs* | DLH | DLH | ||||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Total variable costs | Formula | Formula | Formula | Fav / Unf | ||||
| Fixed costs | ||||||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Title | Amount | Amount | Formula | Fav / Unf | ||||
| Total fixed costs | Formula | Formula | Formula | Fav / Unf | ||||
| Total costs | Formula | Formula | Formula | Fav / Unf | ||||
| (c) Comment on management's efficiency in controlling manufacturing overhead costs in October. | ||||||||
|
| ||||||||
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