Cobb Company estimates that 240,000 direct labor bouts will be worked during 201
ID: 2444917 • Letter: C
Question
Cobb Company estimates that 240,000 direct labor bouts will be worked during 2012 in the Assembly Department. On this basis, the following budgeted manufacturing overhead It is estimated that direct labor hours worked each month will range from 18000 to 24,000 hours. During January, 20,000 direct labor hours were worked and the following overhead costs were incurred. (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 2,000 direct labor hours over the relevant range for the year ending December 31.2012. (b) Prepare a manufacturing overhead budget report for January. (c) Comment on management's efficiency in controlling manufacturing overhead costs in January.Explanation / Answer
Answer:(a)
Answer:b
Cobb Company Monthly Manufacturing Overhead Flexible Budget Assembly Department For the year 2012 Activity level/Direct labor hours 18000 20000 22000 24000 Variable costs Indirect labor ($0.30) 5400 6000 6600 7200 Indirect Materials ($0.20) 3600 4000 4400 4800 Repairs ($0.15) 2700 3000 3300 3600 Utilities ($0.11) 1980 2200 2420 2640 Lubricants ($0.04) 720 800 880 960 Total variable costs ($0.80) 14400 16000 17600 19200 Fixed costs Supervision 6250 6250 6250 6250 Depreciation 2500 2500 2500 2500 Insurance 1000 1000 1000 1000 Rent 850 850 850 850 Propertu taxes 500 500 500 500 Total fixed costs 11100 11100 11100 11100 Total costs 25500 27100 28700 30300