Cook Company estimates that 323,700 direct labor hours will be worked during the
ID: 2479077 • Letter: C
Question
Cook Company estimates that 323,700 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $88,440 Indirect labor $129,480 Depreciation 60,480 Indirect materials 67,977 Insurance 32,640 Repairs 55,029 Rent 27,600 Utilities 55,029 Property taxes 17,400 Lubricants 29,133 $226,560 $336,648 It is estimated that direct labor hours worked each month will range from 27,300 to 33,600 hours. During October, 27,300 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: supervision $7,370, depreciation $5,040, insurance $2,692, rent $2,300, and property taxes $1,450. Variable overhead costs: indirect labor $11,781, indirect materials, $5,275, repairs $4,588, utilities $5,047, and lubricants $2,763 Prepare a flexible budget report for October.
Problem 24-1A Cook Company estimates that 323,700 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year, Fixed Overhead Costs Variable Overhead Costs Supervision Depreciation Insurance Rent Property taxes $88,440 Indirect labor 60,480 Indirect materials 32,640 Repairs 27,600 Utilities 17,400 Lubricants $129,480 67,977 55,029 55,029 29,133 $336,648 $226,560 It is estimated that direct labor hours worked each month will range from 27,300 to 33,600 hours. During October, 27,300 direct labor hours were worked and the following overhead costs were incurred Fixed overhead costs: supervision $7,370, depreciation $5,040, insurance $2,692, rent $2,300, and property taxes $1,450 Variable overhead costs: indirect labor $11,781, indirect materials, $5,275, repairs $4,588, utilities $5,047, and lubricants $2,763Explanation / Answer
Correct Budgets are prepared as under:
*32,640/12 = Budgeted insurance
Overall performance of management was not very favourable
Cook Company Packaging Department Monthly manufacturing Overhead Flexible budget For the year 2014 Activity Level Direct labour hours 27,300 29,400 31,500 33,600 Variable Costs: Indirect labour 10,920 11,760 12,600 13,440 Indirect Materials 5733 6174 6615 7056 Repairs 4,641 4,998 5,355 5,712 utilities 4641 4998 5355 5712 Lubricants 2,457 2,646 2,835 3,024 Total variable costs 28,392 30,576 32,760 34,944 Fixed Costs Supervision 7,370 7,370 7,370 7,370 Depreciation 5,040 5,040 5,040 5,040 Insurance 2,720 2,720 2,720 2,720 Rent 2300 2300 2300 2300 property taxes 1450 1450 1450 1450 Total fixed costs 18,880 18,880 18,880 18,880 Total Costs 47,272 49,456 51,640 53,824