Cook Company estimates that 339,300 direct labor hours will be worked during the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing overhead cost data are computed for the year.
| Fixed Overhead Costs |
|
Variable Overhead Costs |
| Supervision |
|
$93,600 |
|
Indirect labor |
|
$142,506 |
| Depreciation |
|
74,520 |
|
Indirect materials |
|
81,432 |
| Insurance |
|
35,640 |
|
Repairs |
|
67,860 |
| Rent |
|
24,000 |
|
Utilities |
|
67,860 |
| Property taxes |
|
14,520 |
|
Lubricants |
|
27,144 |
|
|
$242,280 |
|
|
|
$386,802 |
It is estimated that direct labor hours worked each month will range from 28,900 to 37,900 hours.
During October, 28,900 direct labor hours were worked and the following overhead costs were incurred.
Fixed overhead costs: Supervision $7,800, Depreciation $6,210, Insurance $2,937, Rent $2,000, and Property taxes $1,210.
Variable overhead costs: Indirect labor $13,219, Indirect materials, $6,620, Repairs $5,700, Utilities $6,152, and Lubricants $2,596.
(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