g Bumblebee Company estimates that 379,500 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year. Fixed Overhead Costs Variable Overhead Costs Supervision $94,440 Indirect labor $174,570 Depreciation 73,320 Indirect materials 75,900 Insurance 25,560 Repairs 53,130 Rent 21,120 Utilities 94,875 Property taxes 20,880 Lubricants 37,950 $235,320 $436,425 It is estimated that direct labor hours worked each month will range from 24,900 to 36,900 hours. During October, 24,900 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: Supervision $7,870, Depreciation $6,110, Insurance $2,095, Rent $1,760, and Property taxes $1,740. Variable overhead costs: Indirect labor $12,544, Indirect materials, $4,500, Repairs $3,406, Utilities $6,545, and Lubricants $2,740. (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 4,000 direct labor hours over the relevant range for the year ending December 31, 2020. (List variable costs before fixed costs.)

Explanation:

Given that :

Bumblebee Company estimates that 379,500 direct labor hours will be worked during the coming year, 2020, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs                        Variable Overhead Costs

Supervision              $94,440            Indirect labor              $174,570          

Depreciation             73,320              Indirect materials          75,900

Insurance                   25,560            Repairs                            53,130

Rent                            21,120              Utilities                            94,875

Property taxes            20,880           Lubricants                       37,950

                               $235,320                                                 $436,425

It is estimated that direct labor hours worked each month will range from 24,900 to 36,900 hours.

During October, 24,900 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: Supervision $7,870, Depreciation $6,110, Insurance $2,095, Rent $1,760, and Property taxes $1,740.

Variable overhead costs: Indirect labor $12,544, Indirect materials, $4,500, Repairs $3,406, Utilities $6,545, and Lubricants $2,740.

The objective is to prepare a monthly manufacturing overhead flexible budget for each increment of 4,000 direct labor hours over the relevant range for the year ending December 31, 2020. (List variable costs before fixed costs.)

The monthly manufacturing overhead flexible budget can be computed as

follows:

                                       Bumblebee Company

                                      Packaging Department

                     Monthly manufacturing overhead  Flexible

                     Budget For the year  ended December 31,2017

Particulars                           Operating Capacity(Direct Labor Hours)

                                          24900            28900        32900       36900

Variable Factory -

Overhead Costs :

Indirect labor                      11454              13294          15134          16974

Indirect materials                4980              5780          6580           7380

Repairs                                3486              4046          4606           5166

Utilities                                6225               7225          8225          9225

Lubricants                           2490               2890          3290          3690

Total Variable Factory-                                                                                

Overhead Cost                28635               33235        37835       42435  

Fixed Factory -

Overhead Cost :

Supervision                      7870              7870             7870         7870

Depreciation                     6110               6110              6110          6110

Insurance                          2130              2130              2130         2130

Rent                                   1760              1760              1760         1760

Property Taxes                 1740              1740              1740          1740

Total Fixed Factory -                                                                                

Overhead Cost:              19610           19610             19610       19610  

Total Factory -                                                                                          

Overhead Cost (A+B)    48245           52845           57445     62045  

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