P21_Cook Company _Manfacturing Budgets

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P21-1A - Prepare flexible budget and budget report for manufacturing overhead.
Cook Company estimates that3,60,000direct labor hours will be worked during the coming year, 
2012, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, shown below, are computed for the year.
 Fixed Overhead Costs Variable Overhead Costs 
 Supervision$90,000 Indirect labor$1,26,000 
 Depreciation60,000 Indirect materials90,000 
 Insurance30,000 Repairs54,000 
 Rent24,000 Utilities72,000 
 Property taxes18,000 Lubricants18,000 
  $2,22,000  $3,60,000 
 
It is estimated that direct labor hours worked each month will range from27,000to36,000
hours.
During October,27,000direct labor hours were worked and the following overhead costs were 
incurred.
 Fixed Overhead Costs Variable Overhead Costs 
 Supervision$7,500 Indirect labor$10,360 
 Depreciation5,000 Indirect materials6,400 
 Insurance2,470 Repairs4,000 
 Rent2,000 Utilities5,700 
 Property taxes1,500 Lubricants1,640 
 
Instructions:
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000direct labor hours
over the relevant range for the year ending December 31, 2012.

 

(b) Prepare a flexible budget report for October.

 

 

(c) Comment on management's efficiency in controlling manufacturing overhead costs in October.

 

 

 

 

    • 7 years ago
    P21_Cook Company _Manfacturing Budgets
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