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P10-1A Cook Company estimates that 300,000

Price: $2.50

Cook Company estimates that 300,000 direct labor hours will be worked during
the coming year, 2014, in the Packaging Department. On this basis, the budgeted manufacturing
overhead cost data, shown below, are computed for the year.

It is estimated that direct labor hours worked each month will range from 27,000 to 36,000
During October, 27,000 direct labor hours were worked and the following overhead
costs were incurred.
Fixed overhead costs: supervision $8,000, depreciation $6,000, insurance $2,460,
rent $2,000, and property taxes $1,500.
Variable overhead costs: indirect labor $12,432, indirect materials $7,680, repairs
$4,800, utilities $6,840, and lubricants $1,920.

(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, 2014.

(b) Prepare a flexible budget report for October.

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