P8-1A : Malone Company estimates that 360,000 direct labor hours will be worked during the coming year, 2008, in the Packaging Department. On this basis, the following budgeted manufacturing overhead cost data are computed for the year.

Fixed Overhead Costs


Variable Overhead Costs


Supervision

$ 90,000

Indirect labor

$126,000

Depreciation

60,000

Indirect materials

90,000

Insurance

30,000

Repairs

54,000

Rent

24,000

Utilities

72,000

Property taxes

18,000

Lubricants

18,000

$222,000

$360,000

It is estimated that direct labor hours worked each month will range from 27,000 to 36,000 hours.

During October, 27,000 direct labor hours were worked and the following overhead costs were incurred.

Fixed overhead costs: Supervision $7,500, Depreciation $5,000, Insurance $2,470, Rent $2,000, and Property taxes $1,500.

Variable overhead costs: Indirect labor $10,360, Indirect materials, $6,400, Repairs $4,000, Utilities $5,700, and Lubricants $1,640.

Required:

(a) Prepare a monthly manufacturing overhead flexible budget for each increment of 3,000 direct labor hours over the relevant range for the year ending December 31, 2008.

(b) Prepare a flexible budget report for October.

(c) Comment on management s efficiency in controlling manufacturing overhead costs in October.