XYZ 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
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, 2011.
2 .Prepare a manufacturing overhead budget report for January.
3. Comment on management's efficiency in controlling manufacturing overhead costs in January.