Seagrave Company estimates that 240,000 direct labor hours will be worked during 2011 in the Assembly Department. On this basis, the following budgeted manufacturing overhead data are computed.

Variable Overhead Costs ???Fixed Overhead Costs

Indirect labor ?   $ 72,000 ??Supervision ? $ 75,000

Indirect materials ??48,000 ??Depreciation ?   30,000

Repairs ???36,000 ??Insurance ?   12,000

Utilities ???26,400 ??Rent ??   9,000

Lubricants ??  9,600 ??Property taxes ?   6,000

$192,000 ????$132,000

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 overheadcosts were incurred.

Variable Overhead Costs ???Fixed Overhead Costs

Indirect labor ?? $ 6,300?? Supervision ?   $ 6,250

Indirect materials??   3,800 ??Depreciation ?     2,500

Repairs ???   2,700?? Insurance ?     1,000

Utilities ???   1,900 ??Rent   ??   850

Lubricants ?? 830 ??Property taxes ?   500

$15,530 ????   $11,100

Instructions

(a) Prepare a monthly flexible manufacturing overhead budget for each increment of 2,000 direct labor hours over the relevantrange for the year ending December 31, 2011.

(b) Prepare a manufacturing overhead budget report for January.

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