Concord Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2020. 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 $0.40 Supervision $43,680 Indirect materials 0.51 Depreciation 17,160 Factory utilities 0.34 Insurance 12,480 Factory repairs 0.24 Rent 23,040 The master overhead budget was prepared on the expectation that 484,200 direct labor hours will be worked during the year. In June, 38,600 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variable—per direct labor hour: indirect labor $0.43, indirect materials $0.50, factory utilities $0.38, and factory repairs $0.29. Fixed: same as budgeted. (a) & (b) (a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2020, assuming production levels range from 42,400 to 57,400 direct labor hours. Use increments of 5,000 direct labor hours. (List variable costs before fixed costs.) CONCORD COMPANY Monthly Manufacturing Overhead Flexible Budget Ironing Department For the Year 2020 $ $ $ $ $ $ $ $ (b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.) CONCORD COMPANY Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2020 Difference Budget Actual Costs Favorable Unfavorable Neither Favorable nor Unfavorable $ $ $ $ $ $
Concord Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2020. 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 $0.40 Supervision $43,680 Indirect materials 0.51 Depreciation 17,160 Factory utilities 0.34 Insurance 12,480 Factory repairs 0.24 Rent 23,040 The master overhead budget was prepared on the expectation that 484,200 direct labor hours will be worked during the year. In June, 38,600 direct labor hours were worked. At that level of activity, actual costs were as shown below. Variable—per direct labor hour: indirect labor $0.43, indirect materials $0.50, factory utilities $0.38, and factory repairs $0.29. Fixed: same as budgeted. (a) & (b) (a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2020, assuming production levels range from 42,400 to 57,400 direct labor hours. Use increments of 5,000 direct labor hours. (List variable costs before fixed costs.) CONCORD COMPANY Monthly Manufacturing Overhead Flexible Budget Ironing Department For the Year 2020 $ $ $ $ $ $ $ $ (b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.) CONCORD COMPANY Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2020 Difference Budget Actual Costs Favorable Unfavorable Neither Favorable nor Unfavorable $ $ $ $ $ $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Concord Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a result, the president has installed a budgetary control system for 2020. 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.
Themaster overhead budget was prepared on the expectation that 484,200 direct labor hours will be worked during the year. In June, 38,600 direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variable—per direct labor hour: indirect labor $0.43, indirect materials $0.50, factory utilities $0.38, and factory repairs $0.29.
Fixed: same as budgeted.
|
Variable costs
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Rate per Direct
Labor Hour |
Annual Fixed Costs
|
||||
| Indirect labor | $0.40 | Supervision | $43,680 | |||
| Indirect materials | 0.51 | 17,160 | ||||
| Factory utilities | 0.34 | Insurance | 12,480 | |||
| Factory repairs | 0.24 | Rent | 23,040 |
The
Variable—per direct labor hour: indirect labor $0.43, indirect materials $0.50, factory utilities $0.38, and factory repairs $0.29.
Fixed: same as budgeted.
(a) & (b)
(a) Prepare a monthly manufacturing overhead flexible budget for the year ending December 31, 2020, assuming production levels range from 42,400 to 57,400 direct labor hours. Use increments of 5,000 direct labor hours. (List variable costs before fixed costs.)
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(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.)
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CONCORD COMPANY
Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2020 |
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