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Overhead flexible budget and report

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Malone Company estimates that 360,000 direct labor hours will be worked during the coming year, 2008, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs Variable Overhead Costs
Supervision $ 90,000 Indirect labor $126,000
Depreciation 60,000 Indirect materials 90,000
Insurance 30,000 Repairs 54,000
Rent 24,000 Utilities 72,000
Property taxes 18,000 Lubricants 18,000
$222,000 $360,000

It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours.

During October, 27,000 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,500, Depreciation $5,000, Insurance $2,470, Rent $2,000, and Property taxes $1,500.

Variable overhead costs: Indirect labor $10,360, Indirect materials, $6,400, Repairs $4,000, Utilities $5,700, and Lubricants $1,640.

Prepare flexible budget and budget report for manufacturing overhead.

(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2008.

(b) Prepare a flexible budget report for October.

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The solution explains how to prepare a overhead flexible budget and related report

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Flexible Overhead Budget, Report and Responsibilty Report

Hay's Corporation is continuing its budget preparations. Hay's had the following static budget and overhead costs for March.

Hay's Corporation Hay's Corporation
Manufacturing Overhead Budget (Static) Manufacturing Overhead Costs (Actual)
For the Month of March For the Month of March
Budgeted production in units 117,500 Production in units 118,500
Budgeted costs Costs
Indirect materials $ 7,050 Indirect materials $ 7,100
Indirect labor 11,750 Indirect labor 11,825
Utilities 10,575 Utilities 10,700
Maintenance 5,875 Maintenance 5,900
Salaries 42,000 Salaries 42,000
Depreciation 16,800 Depreciation 16,800
Property taxes 2,500 Property taxes 2,500
Insurance 1,200 Insurance 1,200
Janitorial 1,300 Janitorial 1,300

Total budgeted costs $99,050 Total costs $99,325

Hay's produced 118,500 units in March rather than the budgeted number of units.

(a) Prepare a flexible overhead budget based on the following amounts produced.

(1) 115,500 units
(2) 116,500 units
(3) 117,500 units
(4) 118,500 units
(5) 119,500 units

(b) Prepare a flexible budget report showing the differences (favorable and unfavorable) in manufacturing overhead costs for the month of March.

(c) Prepare a responsibility report for the manufacturing overhead for March, assuming only variable costs are controllable.

Can you please give me a detail on how it is calculated step by step?

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