Reference no: EM132315938

Question :

Speier Company estimates that 240,000 direct labor hours will be worked during 2017 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.

Prepare ffeXIDie wager and budget report for manufacturing overhead.

Variable Overhead Costs		Fixed Overhead Costs
Indirect labor	$ 72,000	Supervision	$ 75,600
Indirect materials	48,000	Depreciation	30,000
Repairs	36,000	Insurance	12,000
Utilities	24,000	Rent	9,600
Lubricants	12,000	Property taxes	6,000
	$192,000		$133,200

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 overhead costs were incurred.

Variable Overhead Costs

Indirect labor             $6,200

Indirect materials         3,600

Repairs                       2,300

Utilities                       1,700

Lubricants                   1,050

                                $14,850

Fixed Overhead Costs

Supervision                      $6,300

Depreciation                      2,500

Insurance                         1,000

Rent                                850

Property taxes                   500

                                     $11,150

Instructions

(a) 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, 2017.

(b) Prepare a manufacturing overhead budget report for January.

(c) Comment on management's efficiency in controlling manufacturing over-head costs in January.

(a) Total costs: 18,000 DLH, $25,500; 24,000 DLH, $30,300

(b) Budget S27,100 Actual 826.000