Cook Company estimates that 344,700 direct labor hours will be worked during the
ID: 2450351 • Letter: C
Question
Cook Company estimates that 344,700 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, are computed for the year.
It is estimated that direct labor hours worked each month will range from 22,800 to 32,400 hours.
During October, 22,800 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: supervision $7,200, depreciation $6,320, insurance $2,132, rent $1,630, and property taxes $1,030.
Variable overhead costs: indirect labor $11,131, indirect materials, $5,897, repairs $3,120, utilities $4,079, and lubricants $1,746.
Prepare a monthly manufacturing overhead flexible budget for each increment of 3,200 direct labor hours over the relevant range for the year ending December 31, 2014. (List variable costs before fixed costs.)
Explanation / Answer
Cook Company estimates that 344,700 direct labor hours will be worked during the