Clarke Company estimates that 240,000 direct labor hours will be worked during 2010 in the Assembly Department.

Question:

Clarke Company estimates that 240,000 direct labor hours will be worked during 2010 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.

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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.

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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, 2010.

(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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