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ABC company estimates that 300,000 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data, shown below, are computed for the year. Fixed Overhead Costs Supervision Depreciation Insurance $ 78,000 84,000 36,000 24,000 16,800 238,800 Variable Overhead Costs Indirect labor Indirect materials Repairs Utilities Lubricants 126,000 90,000 54.000 72,000 18,000 360,000 Rent Property taxes $ $ It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours. During October 27,000 direct labor hours were worked and the following overhead costs were incurred. Fixed overhead costs: supervision $6,500, depreciation $7,000, insurance $2,200, rent $2,000, and property taxes $1,400. Variable overhead costs: indirect labor $11,500, indirect materials $7,000, repairs $5,200, utilities $4,000, and lubricants $2,020. Instructions (a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2014. (b) Prepare a flexible budget report for October. (c) Comment on management's efficiency in controlling manufacturing overhead costs in October. NOTE: Enter a formula in cells highlighted yellow, remember to use absolute (ABS) and IF formulas when applicable. (a) ABC Company Packaging Department Monthly Manufacturing Overhead Flexible Budget For the Year 2014 Activity level Direct labor hours 27,000 30,000 Variable costs Indirect labor Indirect materials Repairs Utilities Lubricants Total variable costs Per DLH 0.42 0.30 0.18 0.24 0.06 1 20 Fixed costs Supervision Depreciation Insurance Rent Property taxes Total fixed costs Total costs * $126,000/300,000 DLH = $0.42 per DLH ** Supervision = $78,000/12 months = $6,500 per month (b) ABC Company Packaging Department Manufacturing Overhead Flexible Budget Report For the Month Ended October 31, 2014 Budget at 27,000 DLH Actual Costs 27,000 DLH Difference Favorable F Unfavorable U Direct labor hours Variable costs Indirect labor Indirect materials Repairs Utilities Lubricants Total variable costs 0.42 0.30 0.18 0.24 0.06 1.20 ABS ABS ABS ABS ABS ABS Fixed costs Supervision Depreciation Insurance Rent Property taxes Total fixed costs ABS ABS ABS ABS ABS ABS Total costs ABS (c) Ans

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