Question

Flexible Overhead Budget

Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 16,000 hours of productive capacity in the department:

Variable overhead costs:
   Indirect factory labor $152,000
   Power and light 7,200
   Indirect materials 46,400
      Total variable overhead cost $205,600
Fixed overhead costs:
   Supervisory salaries $71,960
   Depreciation of plant and equipment 45,230
   Insurance and property taxes 28,780
      Total fixed overhead cost 145,970
Total factory overhead cost $351,570

Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 14,000, 16,000, and 18,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Direct labor hours 14,000 16,000 18,000
Variable overhead costs:
Indirect factory labor $ $ $
Power and light
Indirect materials
Total variable factory overhead $ $ $
Fixed factory overhead costs:
Supervisory salaries $ $ $
Depreciation of plant and equipment
Insurance and property taxes
Total fixed factory overhead $ $ $
Total factory overhead $ $ $

Answer 1

Solution:

Leno Manufacturing Company
Factory Overhead Cost Budget-Press Department
For the Month Ended November 30
Particulars	DLH - 14000	DLH - 16000	DLH - 18000
Direct labor hours	14000	16000	18000
Variable Overhead Costs:
Indirect factory labor	$133,000.00	$152,000.00	$171,000.00
Power and light	$6,300.00	$7,200.00	$8,100.00
Indirect materials	$40,600.00	$46,400.00	$52,200.00
Total variable costs	$179,900.00	$205,600.00	$231,300.00
Fixed factory overhead costs:
Supervisory salaries	$71,960.00	$71,960.00	$71,960.00
Depreciation of plant and equipment	$45,230.00	$45,230.00	$45,230.00
Insurance and property taxes	$28,780.00	$28,780.00	$28,780.00
Total fixed factory overhead	$145,970.00	$145,970.00	$145,970.00
Total factory overhead	$325,870.00	$351,570.00	$377,270.00