Question

Bumblebee Company estimates that 403,000 direct labor hours will be worked during the coming year, 2020, 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		$94,920		Indirect labor		$161,200
Depreciation		66,360		Indirect materials		112,840
Insurance		29,760		Repairs		80,600
Rent		29,400		Utilities		100,750
Property taxes		22,560		Lubricants		24,180
		$243,000				$479,570

It is estimated that direct labor hours worked each month will range from 29,800 to 36,100 hours.

During October, 29,800 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: Supervision $7,910, Depreciation $5,530, Insurance $2,435, Rent $2,450, and Property taxes $1,880.

Variable overhead costs: Indirect labor $13,010, Indirect materials, $7,924, Repairs $5,910, Utilities $7,890, and Lubricants $2,098.

(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 2,100 direct labor hours over the relevant range for the year ending December 31, 2020. (List variable costs before fixed costs.)

Answer 1

1)
	activity level
	Direct labor hours				29,800	31,900	34,000	36,100
	variable costs
	Indirect labor		0.4		11920	12760	13600	14440
	indirect materials		0.28		8344	8932	9520	10108
	repairs		0.2		5960	6380	6800	7220
	utilities		0.25		7450	7975	8500	9025
	lubricants		0.06		1788	1914	2040	2166
	tota variable cost		1.19		35462	37961	40460	42959
	Fixed expenses
	Supervision				7910	7910	7910	7910
	Depreciation				5530	5530	5530	5530
	insurance				2480	2480	2480	2480
	Rent				2450	2450	2450	2450
	property taxes				1880	1880	1880	1880
	total fixed expenses				20250	20250	20250	20250
	total cost				55712	58211	60710	63209