BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

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 20,000 hours of productive capacity in the department:

Variable overhead cost:
Indirect factory labor $160,000  
Power and light 12,000  
Indirect materials 64,000  
Total variable overhead cost   $256,000
Fixed overhead cost:
Supervisory salaries $80,000  
Depreciation of plant and equipment 50,000  
Insurance and property taxes 32,000  
Total fixed overhead cost   162,000
Total factory overhead cost   $418,000

 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 18,000, 20,000, and 22,000 hours of production.

To determine

Flexible overhead cost budget:

A flexible overhead cost budget is referred as a thorough plan for controlling the overhead cost, and is valid for the firm’s relevant range of activity. Based on the standard inputs, the flexible overhead cost budget is measured. (Example: Machine hours)

To prepare: A flexible factory overhead cost budget for the press department for the month of November for 18,000, 20,000, and 22,000 hours of production.

Explanation

Prepare the July manufacturing standard cost budget for Company GB assuming planned production.

                                  Company LM

             Factory Overhead Cost Budget–Department P

                          For the month ended November 30

Direct labor hours 18,000 20,000 22,000
Variable overhead costs:      
Indirect factory labor    (1) $162,000 $180,000 $198,000
Power and light             (2) 10,800 12,000 13,200
Indirect materials          (3) 57,600 64,000 70,400
Total variable factory overhead cost $230,400 $256,000 $281,600
Fixed factory overhead costs:      
Supervisory salaries    $  80,000 $  80,000 $  80,000
Depreciation of plant and equipment   50,000 50,000 50,000
Insurance and property taxes        32,000 32,000 32,000
Total fixed factory overhead cost $162,000 $162,000 $162,000
Total factory overhead cost $392,400 $418,000 $443,600

Table (1)

Working notes:

Calculate indirect factory labor for 18,000 direct labor hours.

(Indirect factory laborfor 18,000 hours) = Indirect factory labor for 20,000 hours20,000direct labor hours×18,000hours=$180,00020,000hours×18,000 hours=$162,000

Calculate indirect factory labor for 22,000 direct labor hours.

(Indirect factory laborfor 22,000 hours) = Indirect factory labor for 20,000 hours20,000direct labor hours×22,000hours=$180,00020,000hours×22,000 hours=$198,000 (1)

Calculate power and light for 18,000 direct labor hours

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Is the following equation correct for finding the value of a constant growth stock? Explain. P0=Dors+g

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

Who issues a credit memorandum and why?

College Accounting (Book Only): A Career Approach

Each time an account is written off under the direct write-off method, Bad Debt Expense is debited.

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

NONCONSTANT GROWTH STOCK VALUATION Taussig Technologies Corporation (TTC) has been growing at a rate of 20% per...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

How do households dissave?

Economics For Today