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melomori [17]
3 years ago
13

g Bumblebee Company estimates that 379,500 direct labor hours will be worked during the coming year, 2020, in the Packaging Depa

rtment. 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.)
Business
1 answer:
wel3 years ago
8 0

Answer:

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

<u>Total Variable Factory-                                                                                 </u>

<u>Overhead Cost                28635               33235        37835       42435  </u>

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

<u>Total Fixed Factory -                                                                                </u>

<u>Overhead Cost:              19610           19610             19610       19610  </u>

<u>Total Factory -                                                                                           </u>

<u>Overhead Cost (A+B)    48245           52845           57445     62045  </u>

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Answer:

1. Plantwide Overhead Rate $ 220.06 per machine hour

Total Cost per Unit= Model 145 $ 555.96 per unit

Total cost per unit = Model 212 $ 616.94 per unit

Profit (loss)    Model 145  219.04

Loss Model 212  (26.94)

Explanation:

Real Cool

<u>Process Activity               Overhead Cost         Driver         Quantity</u>

<u><em>Components </em></u>

Changeover                      $452,000    Number of batches    750

Machining                             300,200        Machine hours      7,640

<u>Setups                                229,000        Number of setups      40</u>

                                          $981,200

<u><em>Finishing</em></u>  

Welding                         $180,100            Welding hours         3,600

Inspecting                     231,000       Number of inspections    850

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                                   $472,350

<u><em>Support </em></u>

Purchasing                $136,500           Purchase orders           480

Providing space          30,300          Number of units          4,500

<u>Providing utilities        50,910            Number of units          4,500</u>

                                  $227,710

Additional production information concerning its two product lines follows.

                                        Model 145           Model 212

Units produced                   1,500                  3,000

Welding hours                    1,400                   2,200

Batches                                 375                       375

Number of inspections          610                       340

Machine hours                       2,290                    6,350

Setups                                      20                             20

Rework orders                         80                             130

Purchase orders                    320                            160

We find the plantwide overhead rate by dividing the total overhead with the total machine hours.

1. Plantwide Overhead Rate= Total Factory Overhead/ Total Machine Hours

Plantwide Overhead Rate= $981,200+ $472,350+$227,710/7640

                                       = 1681260/7640= $ 220.06 per machine hour

We multiply the machine hours of each model to get the overhead .

2.  Cost of Model 145

Materials and Labor  = $220 *1500= $330,000

Overhead = $220.06 *2290= $503,937.4

Total Cost = $83,3937.4

Total Cost per Unit= $83,3937.4/1500= $ 555.96 per unit

Cost Of Model 212

Materials and Labor  = $150 *3000= $ 450,000

Overhead = $220.06 *6350= $ 1400,810

Total Cost = $ 1850810

Total cost per unit = $ 1850810/ 3000= $ 616.94 per unit

We find the profit or loss by subtracting the mfg cost from the market value.

3.                                        Model 145          Model 212

Market Price                     $775                     $590

<u>Manufacturing Cost          ($555.96)               ($616.94)</u>

<u>Profit (loss)                          219.04                      (26.94)</u>

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