Reference no: EM132565535
The following data was used in developing the master manufacturing overhead budget for a manufacturing Department, which is based on an activity index of direct labor hours.
Variable costs Rate per Direct Labor Hour
Annual Fixed Costs
Indirect labor $0.43
Supervision $42,240 Indirect materials 0.51
Depreciation 15,600 Factory utilities 0.34
Insurance 15,960 Factory repairs 0.20
Rent 23,280
The master overhead budget was prepared on the expectation that 477,800 direct labor hours will be worked during the year. In June, 43,300 direct labor hours were worked. Actual costs are shown below:
Variable costs-per direct labor hour:
indirect labor $0.47,
indirect materials $0.49,
factory utilities $0.38, and
factory repairs $0.24.
Fixed: same as budgeted.
Required:
Question a) Make a flexible budget report for June compare actual results with budget
Question b) Discuss the benefits of using a flexible budget vs. a static budget
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