Question

Exercise 10-3 (Video) Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows: Indirect labor $1.30 Indirect materials 0.60 Utilities 0.30 Fixed overhead costs per month are Supervision $3,900, Depreciation $1,900, and Property Taxes $700. The company believes it will normally operate in a range of 6,300-11,700 direct labor hours per month Prepare a monthly manufacturing overhead flexible budget for 2020 for the expected range of activity, using increments of 1,800 direct labor hours. (List variable costs before fixed costs.) MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2020 Click if you would like to Show Work for this question: Open Show Work

Answer 1

11,700 MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget Activity level Direct Labor hours 6,300 8,100 9,900 Variable Costs Indirect Labor | $ 8,190 $ 10,530 $ 12,870 $ Indirect Materials $ 3,780 $ 4,860 $ 5,940 $ Utilities $ 1,890 $ 2,430 $ 2,970 $ Totab Variable Costs $ 13,860 $ 17,820 $ 21,780 $ Fixed Costs Supervision $ 3,900 $ 3,900 $ 3,900 $ Depreciation $ 1,900 $ 1,900 $ 1,900 $ Property Taxes $ 700 $ 700 $ 700 $ Total Fixed Costs $ 6,500 $ 6,500 $ 6,500 $ Total Costs $ 20,360 $ 24,320 $ 28,280 $ 15,210 Direct labor hours * Overhead cost per direct labor hour 7,020 Direct labor hours * Overhead cost per direct labor hour 3,510 Direct labor hours * Overhead cost per direct labor hour 25,740 3,900 Fixed cost would remain 1,900 Fixed cost would remain 700 Fixed cost would remain 6,500 32,240 Example for 6,300 DLHS Indirect Labor (DLHS 6,300) = 6,300 direct labor hours $ 1.30 Indirect Materials (DLHS 6,300) = 6,300 direct labor hours $ 0.60 Utilities (DLHS 6,300) = 6,300 direct labor hours $0.30