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    Flexible Overhead Budget

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    Kwikeze Company set the following standard costs for one unit of its product.

    Direct materials ((3.0 Ibs. @ $5.0 per Ib.) $ 15.00
    Direct labor (1.7 hrs. @ $14.0 per hr.) 23.80
    Overhead (1.7 hrs. @ $18.50 per hr.) 31.45
    Total standard cost $ 70.25

    The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory's capacity of 20,000 units per month. Following are the company's budgeted overhead costs per month at the 75% level.

    Overhead Budget (75% Capacity)
    Variable overhead costs
    Indirect materials $ 15,000
    Indirect labor 75,000
    Power 15,000
    Repairs and maintenance 30,000
    Total variable overhead costs $ 135,000
    Fixed overhead costs
    Depreciation - building 23,000
    Depreciation - machinery 73,000
    Taxes and insurance 20,000
    Supervision 220,750
    Total fixed overhead costs 336,750
    Total overhead costs $ 471,750

    The company incurred the following actual costs when it operated at 75% of capacity in October.

    Direct materials (46,000 Ibs. @ $5.20 per lb.) $ 239,200
    Direct labor (31,000 hrs. @ $14.40 per hr.) 446,400
    Overhead costs
    Indirect materials $ 43,750
    Indirect labor 176,750
    Power 17,250
    Repairs and maintenance 34,500
    Depreciation - building 23,000
    Depreciation - machinery 98,550
    Taxes and insurance 18,000
    Supervision 220,750 632,550
    Total costs $ 1,318,150

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    https://brainmass.com/business/accounting/flexible-overhead-budget-518313

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    Variance
    Direct material -14200 unfavorable
    Direct ...

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