Calculate the total overhead cost to be applied to each

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Reference no: EM13585861

The Splash makes large fiberglass swimming pools and uses machine hours and direct labor hours to apply overhead in the Production and Installation departments, respectively. The monthly cost formula for overhead in Production is y = $7,950 + $4.05 MH; the overhead cost formula in Installation is y = $6,150 + $14.25 DLH. These formulas are valid for a relevant range of activity up to 6,000 machine hours in Production and 9,000 direct labor hours in Installation.

Each pool is estimated to require 25 machine hours in Production and 60 hours of direct labor in Installation. Expected capacity for the year is 120 pools.





a. Prepare a flexible budget for Production at possible annual capacities of 2,500, 3,000, and 3,500 machine hours.

The Splash

Flexible Budget

For the Upcoming Year



2500 MH


3000 MH


3500 MH

Production overhead costs:







Variable


$  


$  


$  

Fixed


 


 


 

Total


$  


$  


$  





Prepare a flexible budget for Installation at possible annual capacities of 6,000, 7,000, and 8,000 direct labor hours.

The Splash

Flexible Budget

For the Upcoming Year



6000 DLH


7000 DLH


8000 DLH

Installation overhead costs:







Variable


$  


$  


$  

Fixed


 


 


 

Total


$  


$  


$  





b. Prepare a budget for next month's variable, fixed, and total overhead costs for each department assuming that expected production is eight pools.

The Splash

Overhead Budget

For Next Month

Production (25 MH per pool)





Variable


$  



Fixed


 



Total production overhead




$  

Installation (60 DLH per pool)





Variable


$  



Fixed


 



Total installation




 

Total




$  

c. Calculate the total overhead cost to be applied to each pool scheduled for production in the coming month if expected capacity is used to calculate the predetermined OH rates. Round your answer to the nearest cent.
Overhead cost per pool: $

Reference no: EM13585861

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