Cody Co. developed its annual manufacturing overhead budget for its master budge
ID: 2359664 • Letter: C
Question
Cody Co. developed its annual manufacturing overhead budget for its master budget for 2012 as follows: Expected annual operating capacity 120,000 Direct Labor Hours Variable overhead costs Indirect labor $360,000 Indirect materials 90,000 Factory supplies 60,000 Total variable 510,000 Fixed overhead costs Depreciation 180,000 Supervision 120,000 Property taxes 96,000 Total fixed 396,000 Total costs $906,000 The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours. Instructions Prepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours. ?Explanation / Answer
RANEY COMPANY Monthly Manufacturing Overhead Budget For the year 2010 Variable overhead: Per DLH 7000 DLH 8000 DLH 9000 DLH 10000 DLH Indirect labor $1 $7,000 $8,000 $9,000 $10,000 Indirect material $0.50 $3,500 $4,000 $4,500 $5,000 Utilities $0.40 $2,800 $3,200 $3,600 $4,000 Total variable cost - (A) $2 $13,300 $15,200 $17,100 $19,000 Fixed cost: Per Month Supervision $4,000 $4,000 $4,000 $4,000 $4,000 Depreciation $1,500 $1,500 $1,500 $1,500 $1,500 Property tax $800 $800 $800 $800 $800 Total fixed cost - (B) $6,300 $6,300 $6,300 $6,300 $6,300 Total Cost - (A + B) $19,600 $21,500 $23,400 $25,300 DLH = Direct Labor Hours