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Variable costsRate per DirectLabor HourAnnual Fixed Costs(a)

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Variable costs
Rate per Direct
Labor Hour
Annual Fixed Costs
(a)
ZELMER COMPANY
Monthly Manufacturing Overhead Flexible Budget
Ironing Department
For the Year 2014
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 CostsIndirect
labor$0.42Supervision$41,196Indirect
materials0.54Depreciation18,876Factory
utilities0.35Insurance12,552Factory repairs0.23Rent28,488
The master overhead budget was prepared on the
expectation that 482,100 direct labor hours will be worked
during the year. In June, 43,130 direct labor hours were
worked. At that level of activity, actual costs were as
shown below.
Variableper direct labor hour: indirect labor $0.45,
indirect materials $0.53, factory utilities $0.38, and factory
repairs $0.29.

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Fixed: same as budgeted. 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 $41,196 Indirect
materials 0.54 Depreciation 18,876 Factory utilities
0.35 Insurance 12,552 Factory repairs 0.23 Rent
28,488 The master overhead budget was prepared on the
expectation that 482,100 direct labor hours will be worked
during the year. In June, 43,130 direct labor hours were
worked. At that level of activity, actual costs were as
shown below. Variable½per direct labor hour: indirect labor
$0.45, indirect materials $0.53, factory utilities $0.38, and
factory repairs $0.29. Fixed: same as budgeted.
(a) Prepare a monthly manufacturing overhead flexible
budget for the year ending December 31, 2014, assuming
production levels range from 42,100 to 58,000 direct labor
hours. Use increments of 5,300 direct labor hours. (List
variable costs before fixed costs.) ZELMER COMPANY
Monthly Manufacturing Overhead Flexible Budget Ironing
Department For the Year 2014
Solution
Statement Showing O/H flexible budget Particulars
42,100.00 47,400.00 52,700.00 58,000.00
Actual Hours 43,130 Variable O/H - Indirect Labour

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Variable costs Rate per Direct Labor Hour Annual Fixed Costs (a) ZELMER COMPANY Monthly Manufacturing Overhead Flexible Budget Ironing Department For the Year 2014 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 CostsIndirect labor$0.42Supervision$41,196Indirect materials0.54Depreciation18,876Factory utilities0.35Insurance12,552Factory repairs0.23Rent28,488 The master overhead budget was prepared on the expectation that 482,100 direct labor hours will be worked during the year. In June, 43,130 direct labor hours were worked. At that level of activit ...
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