Question

Shamrock Company is preparing its manufacturing overhead budget for 2022 . Relevant data are as follows:

Units to be produced (by quarters): 10,500,12,300,15,300,18,200
Direct labour: 1.4 hours per unit
Variable overhead costs per direct labour hour: indirect materials $0.60; indirect labour $1.20; and maintenance $0.50
Fixed overhead costs per quarter: supervisory salaries $35,300; depreciation $16,500; and maintenance $15,400 Prepare the manufacturing overhead budget for the year, showing quarterly data. (Round variable cost per unit to 2 decimal places, eg. 15.25.)

Answer 1

To prepare the manufacturing overhead budget for 2022, calculate fixed and variable costs and sum them up for each quarter.

Step-by-step explanation:

To prepare the manufacturing overhead budget for 2022, we need to calculate both fixed and variable costs. Here's how:

1. Calculate the variable overhead costs per direct labor hour: indirect materials ($0.60) + indirect labor ($1.20) + maintenance ($0.50) = $2.30
2. Calculate the fixed overhead costs for each quarter: supervisory salaries ($35,300) + depreciation ($16,500) + maintenance ($15,400)
3. Calculate the variable overhead costs for each quarter: variable cost per direct labor hour ($2.30) x direct labor hours per unit (1.4) x units to be produced in each quarter
4. Sum up the fixed and variable overhead costs for each quarter to get the total manufacturing overhead budget.