Cook Company estimates that 333,000 direct labor hours will be worked during the
ID: 2453962 • Letter: C
Question
Cook Company estimates that 333,000 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 26,800 to 33,700 hours.
During October, 26,800 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,150, Depreciation $5,520, Insurance $2,290, Rent $2,100, and Property taxes $1,770.
Variable overhead costs: Indirect labor $13,316, Indirect materials, $5,435, Repairs $5,294, Utilities $4,995, and Lubricants $2,407.
1)- Prepare a monthly manufacturing overhead flexible budget for each increment of 2,300 direct labor hours over the relevant range for the year ending December 31, 2014. (List variable costs before fixed costs.)
2)- Prepare a flexible budget report for October. (List variable costs before fixed costs.)
Fixed Overhead Costs Variable Overhead Costs Supervision $85,800 Indirect labor $153,180 Depreciation 66,240 Indirect materials 73,260 Insurance 27,960 Repairs 66,600 Rent 25,200 Utilities 56,610 Property taxes 21,240 Lubricants 26,640 $226,440 $376,290Explanation / Answer
Cook Company estimates that 333,000 direct labor hours will be worked during the