XYZ 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

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

2 .Prepare a manufacturing overhead budget report for January.

3. Comment on management's efficiency in controlling manufacturing overhead costs in January.