Zelmer Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2014.
The following data were used in developing the master manufacturing overhead budget for the Ironing Department, which is based on an activity index of direct labor hours:
| Variable costs | Rate per Direct Labor Hour | Annual Fixed Costs |
|---|---|---|
| Indirect labor | $0.42 | Supervision, $42,264 |
| Indirect materials | 0.53 | Depreciation, 20,160 |
| Factory utilities | 0.32 | Insurance, 14,748 |
| Factory repairs | 0.21 | Rent, 30,720 |
The master overhead budget was prepared on the expectation that 480,800 direct labor hours will be worked during the year.
In June, 38,610 direct labor hours were worked.
At that level of activity, actual costs were as shown below.
| Variable-per direct labor hour: | |
| Indirect labor | $0.45 |
| Indirect materials | $0.52 |
| Factory utilities | $0.35 |
| Factory repairs | $0.26. |
| Fixed: | |
| same as budgeted. |
Required:
A). Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2014, assuming production levels range from 36,900 to 54,600 direct labor hours.
Use increments of 5,900 direct labor hours.
(List variable costs before fixed costs.)
B). Prepare a budget report for June, comparing actual results with budget data, based on the flexible budget.
(List variable costs before fixed costs.)
C). State the formula for computing the total budgeted costs for the Ironing Department.
(Round variable cost per unit to 2 decimal places)
