Seagrave Company estimates that 240,000 direct labor hours will be worked during 2011 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.
Variable Overhead Costs ???Fixed Overhead Costs
Indirect labor ? $ 72,000 ??Supervision ? $ 75,000
Indirect materials ??48,000 ??Depreciation ? 30,000
Repairs ???36,000 ??Insurance ? 12,000
Utilities ???26,400 ??Rent ?? 9,000
Lubricants ?? 9,600 ??Property taxes ? 6,000
$192,000 ????$132,000
It is estimated that direct labor hours worked each month will range from 18,000 to 24,000 hours.
During January, 20,000 direct labor hours were worked and the following overheadcosts were incurred.
Variable Overhead Costs ???Fixed Overhead Costs
Indirect labor ?? $ 6,300?? Supervision ? $ 6,250
Indirect materials?? 3,800 ??Depreciation ? 2,500
Repairs ??? 2,700?? Insurance ? 1,000
Utilities ??? 1,900 ??Rent ?? 850
Lubricants ?? 830 ??Property taxes ? 500
$15,530 ???? $11,100
Instructions
(a) Prepare a monthly flexible manufacturing overhead budget for each increment of 2,000 direct labor hours over the relevantrange for the year ending December 31, 2011.
(b) Prepare a manufacturing overhead budget report for January.
(c) Comment on management's efficiency in controlling manufacturing overhead costs in January.