Cook Company estimates that 318,700 direct labor hours will be worked during the
ID: 2474410 • Letter: C
Question
Cook Company estimates that 318,700 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. Fixed Overhead Costs Variable Overhead Costs Supervision $91,320 Indirect labor $137,041 Depreciation 70,080 Indirect materials 89,236 Insurance 32,880 Repairs 44,618 Rent 29,280 Utilities 73,301 Property taxes 23,040 Lubricants 19,122 $246,600 $363,318 It is estimated that direct labor hours worked each month will range from 29,300 to 36,200 hours. During October, 29,300 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: supervision $7,610, depreciation $5,840, insurance $2,697, rent $2,440, and property taxes $1,920. Variable overhead costs: indirect labor $13,636, indirect materials, $7,732, repairs $4,055, utilities $7,147, and lubricants $2,167.
Explanation / Answer
COOK COMPANY Packaging Department Monthly Manufacturing Overhead Flexible Budget For the year 2014 Activity level Direct labor hour 29300 31600 33900 36200 Variable cost: Indirect Labor 11,008 12,126 13,244 14,362 Indirect Material 7,168 7,896 8,624 9,352 Repairs 3,584 3,948 4,312 4,676 Utilities 5,888 6,486 7,084 7,682 Lubricants 1,536 1,692 1,848 2,004 Total variable cost 29,184 32,148 35,112 38,076 Fixed cost: Supervision 7,610 7,610 7,610 7,610 Depreciation 5,840 5,840 5,840 5,840 Insurance 2,740 2,740 2,740 2,740 Rent 2,440 2,440 2,440 2,440 Property Taxes 1,920 1,920 1,920 1,920 Total Fixed Costs 20,550 20,550 20,550 20,550 Total Costs 49,734 52,698 55,662 58,626