Speier Company estimates that 240,000 direct labor hours will be
worked during 2014 in the Assembly Department.
P10-1B Speier Company estimates that 240,000 direct labor hours will be
worked during 2014 in the Assembly Department. On this basis, the following
budgeted manufacturing overhead data are computed.
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 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 fl exible 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.
TUTORIAL
PREVIEW
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SPEIER COMPANY
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Flexible Monthly Manufacturing Overhead Budget
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Assembly Department
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For the Year 2014
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Activity
level
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Direct
labor hours
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18,000
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20,000
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22,000
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24,000
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Variable
costs
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Indirect labor ($0.30)
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$5,400
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$6,000
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$6,600
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$7,200
|
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Indirect materials ($0.20)
|
3,600
|
4,000
|
4,400
|
4,800
|
|
Repairs ($0.15)
|
2,700
|
3,000
|
3,300
|
3,600
|
File name: P10-1B Speier Company.xls File type: xls PRICE: $8
