Campbell Soup Company estimate

Question

Campbell Soup Company estimates that 396,000 direct labor hourswill be worked during 2018 in the Mixing Department. On this basis,the following budgeted manufacturing overhead data arecomputed:Variable Overhead CostsFixed Overhead CostsIndirect labor$99,000Supervision$138,600Indirect materials66,000Depreciation99,000Repairs33,000Insurance59,400Utilities26,400Rent79,200Lubricants19,800Property taxes19,800$244,200   $396,000It is estimated that direct labor hours worked each month willrange from 29,700 to 39,600 hours. During March, 29,700 directlabor hours were worked and the following overhead costs wereincurred (shown in the chart below):Variable Overhead CostsFixed Overhead CostsIndirect labor$8,400Supervision$11,800Indirect materials5,000Depreciation8,250Repairs2,600Insurance4,900Utilities2,100Rent6,600Lubricants1,500Property taxes1,750$19,600$33,300Instructions:Prepare a monthly flexible manufacturing overhead budget foreach increment of 3,300 direct labor hours overthe relevant range for the Mixing Dept. for the year endingDecember 31, 2018.Prepare a manufacturing overhead budget report forMarch.  Answer:  Monthly manufacturing overhead Flexible budgetActivity leveldirect labor hours29,70033,00036,30039,600variable expenseindirect labor7425825090759900indirect materials4950550060506600repairs2475275030253300utilities1980220024202640Lubricants1485165018151980total variable cost18315203502238524420fixed expensesupervision11550115501155011550depreciation8250825082508250insurance4950495049504950Rent6600660066006600property taxes1650165016501650total fixed expense33000330003300033000total cost51315533505538557420Manufacturing overhead Flexible budget reportbudgetedActualdifferencedirect labor hours29,70029,700variable expenseindirect labor74258,400975Uindirect materials49505,00050Urepairs24752,600125Uutilities19802,100120Ulubricants14851,50015Utotal variable cost1831519,6001,285Ufixed expensesupervision1155011,800250Udepreciation82508,2500Ninsurance49504,90050FRent66006,6000Nproperty taxes16501,750100Utotal fixed expense3300033,300300Utotal cost5131552,9001,585U

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Campbell Soup Company estimate

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Variable Overhead Costs		Fixed Overhead Costs
Indirect labor	$99,000	Supervision	$138,600
Indirect materials	66,000	Depreciation	99,000
Repairs	33,000	Insurance	59,400
Utilities	26,400	Rent	79,200
Lubricants	19,800	Property taxes	19,800
	$244,200		$396,000


	Monthly manufacturing overhead Flexible budget
Activity level
direct labor hours		29,700	33,000	36,300	39,600

variable expense
indirect labor		7425	8250	9075	9900
indirect materials		4950	5500	6050	6600
repairs		2475	2750	3025	3300
utilities		1980	2200	2420	2640
Lubricants		1485	1650	1815	1980
total variable cost		18315	20350	22385	24420

fixed expense
supervision		11550	11550	11550	11550
depreciation		8250	8250	8250	8250
insurance		4950	4950	4950	4950
Rent		6600	6600	6600	6600
property taxes		1650	1650	1650	1650
total fixed expense		33000	33000	33000	33000

total cost		51315	53350	55385	57420




	Manufacturing overhead Flexible budget report
		budgeted	Actual	difference
direct labor hours		29,700	29,700

variable expense
indirect labor		7425	8,400	975	U
indirect materials		4950	5,000	50	U
repairs		2475	2,600	125	U
utilities		1980	2,100	120	U
lubricants		1485	1,500	15	U
total variable cost		18315	19,600	1,285	U

fixed expense
supervision		11550	11,800	250	U
depreciation		8250	8,250	0	N
insurance		4950	4,900	50	F
Rent		6600	6,600	0	N
property taxes		1650	1,750	100	U
total fixed expense		33000	33,300	300	U

total cost		51315	52,900	1,585	U