Speier
Company estimates that 240,000 direct labor hours will be worked during the
coming year, 2014
P10-1B
Speier Company estimates that 240,000 direct labor hours will be worked during
the coming year, 2014, in the Assembly Department. On this basis, the following
budgeted manufacturing overhead cost data are computed for the year.
|
Variable
Overhead Costs
|
Fixed
Overhead Costs
|
||||
|
Indirect labor
|
$72,000
|
$0.30
|
Supervision
|
$75,600
|
$6,300
|
|
Indirect materials
|
48,000
|
$0.20
|
Depreciation
|
30,000
|
$2,500
|
|
Repairs
|
36,000
|
$0.15
|
Insurance
|
12,000
|
$1,000
|
|
Utilities
|
24,000
|
$0.10
|
Rent
|
9,600
|
$800
|
|
Lubricants
|
12,000
|
$0.05
|
Property taxes
|
6,000
|
$500
|
|
$192,000
|
$0.80
|
$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
|
Fixed Overhead Costs
|
|||
|
Indirect labor
|
$6,200
|
Supervision
|
$6,300
|
|
|
Indirect materials
|
3,600
|
Depreciation
|
2,500
|
|
|
Repairs
|
2,300
|
Insurance
|
1,000
|
|
|
Utilities
|
1,700
|
Rent
|
850
|
|
|
Lubricants
|
1,050
|
Property taxes
|
500
|
|
|
|
$14,850
|
|
$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, 2014.b. Prepare a manufacturing overhead budget report for January.
c. Comment on management's efficiency in controlling manufacturing overhead costs in January.
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, 2014.
SPEIER
COMPANY
Flexible Monthly Manufacturing Overhead Budget
Assembly Department
For the Year 2014
|
Activity level
|
||||
|
Direct labor hours
|
18,000
|
20,000
|
22,000
|
24,000
|
|
Variable costs
|
||||
|
Indirect labor ($0.30)
|
$5,400
|
$6,000
|
$6,600
|
$7,200
|
|
Indirect materials ($0.20)
|
3,600
|
4,000
|
4,400
|
4,800
|
File name: P10-1B Speier.xls File type: xls-template PRICE: $8
