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Cobb Company estimates that 240,000 direct labor hours will be worked during 2012 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.
It is estimated that direct labor hours worked each month will range from 18,000 to 24,000 hours.
During January, 20,000 direct labor hours were worked and the following overhead costs were incurred.
Instructions
(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 2,000 direct labor hours over the relevant range for the year ending December 31, 2012.
(b) Prepare a manufacturing overhead budget report for January.
(c) Comment on management's efficiency in controlling manufacturing overhead costs in January.
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