Question:
Pine Knoll Wood Products Company prepared the following factory overhead cost budget for the Press Department for February 2008, during which it expected to require 10,000 hours of productive capacity in the department:
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Variable overhead cost:
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Indirect factory labor
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$28,000
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|
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Power and light
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4,500
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Indirect materials
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22,000
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|
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Total variable cost
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$ 54,500
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Fixed overhead cost:
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Supervisory salaries
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$36,000
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Depreciation of plant and equipment
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30,000
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Insurance and property taxes
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8,000
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Total fixed cost
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74,000
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Total factory overhead cost
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$128,500
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Assuming that the estimated costs for March are the same as for February, prepare a flexible factory overhead cost budget for the Press Department for March for 8,000, 10,000, and 12,000 hours of production.