Discuss a manufacturing overhead budget report for january

Question

Ogleby Company estimates that 100,000 direct labor hours will be worked during 2014 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed:

Variable Overhead Costs		Fixed Overhead Costs
Indirect labor	$70,000	Supervision	$48,000
Indirect materials	40,000	Depreciation	60,000
Repairs	20,000	Insurance	7,200
Utilities	30,000	Rent	6,000
Lubricants	9,000	Property taxes	12,000
	$169,000		$133,200+

It is estimated that direct labor hours worked each month will range from 6,000 to 12,000 hours. During January, 10,000 direct labor hours were worked and the following overhead costs were incurred.

Variable Overhead Costs		Fixed Overhead Costs
Indirect labor	$4,100	Supervision	$4,000
Indirect materials	4,600	Depreciation	5,000
Repairs	2,000	Insurance	625
Utilities	1,500	Rent	550
Lubricants	500	Property taxes	1,000
	$12,700		$11,175

Instructions:

1. Prepare a monthly flexible manufacturing overhead budget for each increment of 2,000 direct labor hours over the relevant range for the year ending December 31, 2014. Prepare a manufacturing overhead budget report for January.
2. Comment on management's efficiency in controlling manufacturing overhead costs in January.