The accountant for Bright Products, Inc., has analyzed the manufacturing overhead costs for the company's assembly department. The fixed and variable costs follow:

INSTRUCTIONS
1. Prepare a flexible budget for the department for the month of May 2016, assuming that the expected production is for 3,500 direct labor hours. Show costs for production levels of 90 percent and 110 percent of the expected production level of 3,500 hours.
2. Assume that during the month of May, actual production was 2,900 hours. Actual costs for the month were as follows:
Indirect labor.....................................$7,640
Payroll taxes.......................................1,005
Indirect materials....................................950
Utilities............................................1,800
Depreciation......................................1,300
Taxes and insurance...............................565
Maintenance.....................................1,280
Prepare a departmental monthly overhead performance report comparing actual costs with the budget allowance for the total number of hours worked. Round amounts to nearest dollar.
Analyze:
If Bright Products, Inc., operates at the expected production level of 3,500 direct labor hours, what total manufacturing overhead cost is projected per direct labor hour?

Transcribed Image Text:

Variable Cost Element per Hour Monthly Fixed Cost Element Indirect labo Payroll taxes Indirect materials Utilities Depreciation Taxes and insurance Maintenance 2.00 0.35 0.25 0.50 S1,900 200 200 300 1,300 600 300 0.35