Using a flexible budgeting approach how do I prepare a performance report for the current department for September 2016, comparing actual overhead cost with budgeted overhead cost for 5700 hours. Separate overhead costs into variable and fix components and show the amounts of any variances between actual and budget in amounts. Flexible Budget ApplicationThe cutting department of Liberty Manufacturing Company operated during September 2016 with the following manufacturing overhead cost budget based on 6,000 hours of monthly productive capacity:Liberty Manufacturing CompanyCutting DepartmentOverhead Budget (6,000 Hours)For the Month of September 2016Variable costs:Factory supplies$48,000Indirect labor72,000Utilities (usage charge)36,000Patent royalties on secret process144,000Total variable overhead$300,000Fixed costs:Supervisory salaries96,000Depreciation on factory equipment 140,000Factory taxes40,000Factory insurance24,000Utilities (base charge)32.000Total fixed overhead332,000Total manufacturing overhead$632,000The cutting department was operated for 5,700 hours during September and incurred the following manufacturing overhead costs:Factory supplies$40,600Indirect labor69,400Utilities (usage factor)38,100Utilities (base factor)32,000Patent royalties139,200Supervisory salaries96,000Depreciation on factory equipment140,000Factory taxes43,600Factory insurance27,000Total manufacturing overhead incurred $625,900Using a flexible budgeting approach, prepare a performance report for the cutting department for September 2016, comparing actual overhead costs with budgeted overhead costs for 5,700 hours. Separate overhead costs into varlable and fixed components andshow the amounts of any varlances between actual and budgeted amounts.Do not use negative signs with your answers below.Do not round until your final answer. Round answers to nearest whole number, if applicable.Select either U for Unfavorable or F for Favorable using the drop down box next to each of your varlance answers.

Answered: Using a flexible budgeting approach how…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Using a flexible budgeting approach how do I prepare a performance report for the current department for September 2016, comparing actual overhead cost with budgeted overhead cost for 5700 hours. Separate overhead costs into variable and fix components and show the amounts of any variances between actual and budget in amounts.

Flexible Budget Application
The cutting department of Liberty Manufacturing Company operated during September 2016 with the following manufacturing overhead cost budget based on 6,000 hours of monthly productive capacity:
Liberty Manufacturing Company
Cutting Department
Overhead Budget (6,000 Hours)
For the Month of September 2016
Variable costs:
Factory supplies
$48,000
Indirect labor
72,000
Utilities (usage charge)
36,000
Patent royalties on secret process
144,000
Total variable overhead
$300,000
Fixed costs:
Supervisory salaries
96,000
Depreciation on factory equipment 140,000
Factory taxes
40,000
Factory insurance
24,000
Utilities (base charge)
32.000
Total fixed overhead
332,000
Total manufacturing overhead
$632,000
The cutting department was operated for 5,700 hours during September and incurred the following manufacturing overhead costs:
Factory supplies
$40,600
Indirect labor
69,400
Utilities (usage factor)
38,100
Utilities (base factor)
32,000
Patent royalties
139,200
Supervisory salaries
96,000
Depreciation on factory equipment
140,000
Factory taxes
43,600
Factory insurance
27,000
Total manufacturing overhead incurred $625,900
Using a flexible budgeting approach, prepare a performance report for the cutting department for September 2016, comparing actual overhead costs with budgeted overhead costs for 5,700 hours. Separate overhead costs into varlable and fixed components and
show the amounts of any varlances between actual and budgeted amounts.
Do not use negative signs with your answers below.
Do not round until your final answer. Round answers to nearest whole number, if applicable.
Select either U for Unfavorable or F for Favorable using the drop down box next to each of your varlance answers.

Expert Solution

Step 1

Flexible Budget in Manufacturing overhead

Using the flexible budget in the manufacturing overhead to determine the actual cost which are incurred with the volume of operation hour with standard cost which are incurred with the same volume to determine the variance of these two as well.

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