Homework SourseFlexible Overhead Budget Leno Manufacturing Company prepared
Flexible Overhead Budget
Leno Manufacturing Company prepared the following factory overhead cost budget for the Press Department for October of the current year, during which it expected to require 9,000 hours of productive capacity in the department:
Assuming that the estimated costs for November are the same as for October, prepare a flexible factory overhead cost budget for the Press Department for November for 7,000, 9,000, and 11,000 hours of production. Round your interim computations to the nearest cent, if required. Enter all amounts as positive numbers.
| Variable overhead costs: | ||
| Indirect factory labor | $87,300 | |
| Power and light | 3,780 | |
| Indirect materials | 27,000 | |
| Total variable overhead cost | $118,080 | |
| Fixed overhead costs: | ||
| Supervisory salaries | $41,330 | |
| Depreciation of plant and equipment | 25,980 | |
| Insurance and property taxes | 16,530 | |
| Total fixed overhead cost | 83,840 | |
| Total factory overhead cost | $201,920 |
Solution
Solution - Fixed Overhead budget
Leno Manufacturing company
Factory Overhead cost budget - Press Department
For the Month ended November 30
$67900
($87300/9000*7000)
$106700
($87300/9000*11000)
$2940
($3780/9000*7000)
$4620
($3780/9000*11000)
$21000
($27000/9000*7000)
$33000
($27000/9000*11000)
Note :
a) Fixed cost does not change with the change in activity level. Fixed cost
b) Variable cost changes with the change in activity level.
| Direct Labour Hours | 7000 Hours | 9000 Hours | 11000 Hours |
| Variable Overhead cost | |||
| Indirect Factory labour | $67900 ($87300/9000*7000) | $87300 | $106700 ($87300/9000*11000) |
| Power and light | $2940 ($3780/9000*7000) | $3780 | $4620 ($3780/9000*11000) |
| Indirect Materials | $21000 ($27000/9000*7000) | $27000 | $33000 ($27000/9000*11000) |
| Total Variable factory Overhead (A) | $91840 | $118080 | $144320 |
| Fixed Factory overhead cost | |||
| Supervisory salaries | $41330 | $41330 | $41330 |
| Depreciation of Plant and equipment | $25980 | $25980 | $25980 |
| Insurance and Property taxes | $16530 | $16530 | $16530 |
| Total Fixed factory Overhead (B) | $83840 | $83840 | $83840 |
| Total Factory Overhead (A+B) | $175680 | $201920 | $228160 |
