Illustration 23-13 and illustrstion 23-16 as guide Project 2: Flexible Budget and Budget Report (10


Project 2: Flexible Budget and Budget Report (10 points) Upload your file to Moodle by the deadline specified. Do NOT email y

Illustration 23-13 and illustrstion 23-16 as guide


the fixed costs, and determine the budgeted amount fol cost is fixed if the total cost does not vary as a result of changes i
- 12 CHAPTER 23 Budgetary Control and Responsibility Accounting ILLUSTRATION 23.16 Overhead flexible budget report Fox Compan Project 2: Flexible Budget and Budget Report (10 points) Upload your file to Moodle by the deadline specified. Do NOT email your filel Halloween Supplies, Inc. estimates that 120,000 direct labor hours will be worked during 2019 in the Packaging Department. Based on this estimate, the following budoet was developed for manufacturing overhead costs. Variable Overhead Costs $45,000 Fixed Overhead Costs Supervision $84,000 Indirect labor 28,500 Depreciation Indirect materials 24,000 27,600 Repairs Utilities Insurance 15,000 17,400 Rent 10,800 6,600 Property taxes Lubricants 7,200 $125,100 $141,000 It is estimated that direct labor hours worked each month will range from 8,000 to 12,000 hours. During January, 10,000 direct labor hours were worked and the following overhead costs were incurred. Variable Overhead Costs Fixed Overhead Costs $7,000 $4,100 2,300 Supervision Depreciation Indirect labor 2,000 Indirect materials 1,250 Insurance 2,200 Repairs 900 Rent Utilities 1,500 600 Property taxes 600 Lubricants $11,750 $10,700 Instructions for Project 2: 1. Using Excel, prepare a monthly flexible manufacturing overhead budget for each increment of 1,000 direct labor hours over the relevant range for the year ending December 31, 2019. Refer to Illustration 23-13 in the chapter for an example. 2. Using Excel, prepare a manufacturing overhead budget report for January in good form. Refer to Illustration 23-16 in the chapter as a guide. the fixed costs, and determine the budgeted amount fol cost is fixed if the total cost does not vary as a result of changes in the activity index. example, depreciation, supervision, and property taxes are fixed costs. Since Fox desires Therefore, the monthly budgeted fixed costs are depreciation $15,000, supervision $10,000 monthly budget data, it divides each annual budgeted cost by 12 to find the monthly amounts. and property taxes $5,000. Step 4. Prepare the budget for selected increments of activity within the relevant range. Management prepares the budget in increments of 1,000 direct labor hours. Illustration 23.13 shows Fox's flexible budget. TRATION 23.13 y overhead flexible Fox Company Home t Page La la ate Vew P8 A C Fox Company Monthly Manufacturing Overhead Flexible Budget Finishing Department For Months During the Year 2020 3 4 Activity level Direct labor hours Variable costs 6 12,000 8,000 9,000 10,000 11,000 7 8 Indirect materials ($1.50) Indirect labor ($2.00) $18,000 24,000 6,000 $12,000 $16,500 $13,500 18,000 4,500 36,000 $15,000 9 16,000 22,000 5,500 44,000 20,000 Utilities ($0.50) Total variable costs Fixed costs 10 4,000 32,000 5,000 40,000 11 48,000 12 13 Depreciation Supervision Property taxes 15,000 15,000 15,000 10,000 5,000 30,000 $78,000 15,000 10,000 5,000 30,000 $70,000 15,000 14 10,000 10,000 10,000 15 5,000 5,000 30,000 $66,000 5,000 Total fixed costs 30,000 $62,000 16 30,000 $74,000 17 Total costs 18 19 aCost per direct labor hour; b8,000 x $1.50, 8,000 x $2.00; 8,000 x $0.50 – 12 CHAPTER 23 Budgetary Control and Responsibility Accounting ILLUSTRATION 23.16 Overhead flexible budget report Fox Company Home Insert Page Layout Formulas Data Redew Vew P18 A В Fox Company Manufacturing Overhead Flexible Budget Report Finishing Department For the Month Ended January 31, 2020 2 3 4 Difference Favorable F 5 6 Budget at 9,000 DLH Actual costs at Direct labor hours (DLH) 7 Unfavorable – U 9,000 DLH 8 sb d Variable costs o $ 500 1,000 100 Indirect materials ($1.50)a Indirect labor ($2.00) Utilities ($0.50)a 10 $13,500 $14,000 11 17,000 4,600 35,600 18,000 12 4,500 400 plde 13 Total variable costs 36,000 14 15 Fixed costs 16 Depreciation Supervision Property taxes Total fixed costs 15,000 10,000 5,000 30,000 $65,600 15,000 17 10,000 18 5,000 30,000 $66,000 b bddlinsidq o001 b 0,0 19 F 20 Total costs S 400 21 aCost per direct labor hour 22 In subsequent months, Fox Company will prepare other flexible budget reports. For each month, the budget data are based on the actual activity level attained. In February that level may be 11,000 direct labor hours, in July 10,000, and so on. Note that this flexible budget is based on a single cost driver. A more accurate budget often can be developed using the activity-based costing concepts explained in Chapter 17 bax FUF

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