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 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. Rate per Direct Labor Hour Variable costs Annual Fixed Costs Indirect labor $0.43 Supervision $41,040 Indirect materials 0.51 Depreciation 16,080 Factory utilities 0.30 Insurance 13,800 Factory repairs 0.20 Rent 29,520 The master overhead budget was prepared on the expectation that 478,700 direct labor hours will be worked during the year. In June, 38,800 direct labor hours were worked. At that level activity, actual costs were as shown below. Variable-per direct labor hour: indirect labor $0.47, indirect materials $0.49, factory utilities $0.32, and factory repairs $0.25. Fixed: same as budgeted. (b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.) ZELMER COMPANY Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs
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 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. Rate per Direct Labor Hour Variable costs Annual Fixed Costs Indirect labor $0.43 Supervision $41,040 Indirect materials 0.51 Depreciation 16,080 Factory utilities 0.30 Insurance 13,800 Factory repairs 0.20 Rent 29,520 The master overhead budget was prepared on the expectation that 478,700 direct labor hours will be worked during the year. In June, 38,800 direct labor hours were worked. At that level activity, actual costs were as shown below. Variable-per direct labor hour: indirect labor $0.47, indirect materials $0.49, factory utilities $0.32, and factory repairs $0.25. Fixed: same as budgeted. (b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.) ZELMER COMPANY Ironing Department Manufacturing Overhead Flexible Budget Report For the Month Ended June 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Transcribed Image Text:Problem 10-2A a-b, d (Part Level Submission) (Video)
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 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.
Rate per Direct
Labor Hour
Variable costs
Annual Fixed Costs
Indirect labor
$0.43
Supervision
$41,040
Indirect materials
0.51
Depreciation
16,080
Factory utilities
0.30
Insurance
13,800
Factory repairs
0.20
Rent
29,520
The master overhead budget was prepared on the expectation that 478,700 direct labor hours will be worked during the year. In June, 38,800 direct labor hours were worked. At that level of activity, actual costs were as shown below.
Variable-per direct labor hour: indirect labor $0.47, indirect materials $0.49, factory utilities $0.32, and factory repairs $0.25.
Fixed: same as budgeted.
(b) Prepare a budget report for June comparing actual results with budget data based on the flexible budget. (List variable costs before fixed costs.)
ZELMER COMPANY
Ironing Department
Manufacturing Overhead Flexible Budget Report
For the Month Ended June 30, 2020
Difference
Favorable
Unfavorable
Neither Favorable
Budget
Actual Costs
nor Unfavorable
$
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