Question

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 Indirect materials Utilities $1.10 0.60 0.40 Fixed overhead costs per month are Supervision $4,400, Depreciation $1,600, and Property Taxes $900. The company believes it will normally operate in a range of 6,500-11,300 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor $10,430 Supervision $4,400 Indirect materials 5,680 Depreciation 1,600 Utilities 3,460 Property taxes 900

Answer 1

a
Monthly Manufacturing Flexible Budget Report
For the Month ended July 31, 2017
	Budget	Actual costs	Difference
Direct labor hours	9700	9700
Variable costs
Indirect labor	10670	10430	240	Favorable
Indirect materials	5820	5680	140	Favorable
Utilities	3880	3460	420	Favorable
Total variable cost	20370	19570	800	Favorable
Fixed costs
Supervision	4400	4400	0	Neither Favorable nor unfavorable
Depreciation	1600	1600	0	Neither Favorable nor unfavorable
Property taxes	900	900	0	Neither Favorable nor unfavorable
Total fixed costs	6900	6900	0	Neither Favorable nor unfavorable
Total costs	27270	26470	800	Favorable
b
Monthly Manufacturing Flexible Budget Report
For the Month ended July 31, 2017
	Budget	Actual costs	Difference
Direct labor hours	9100	9100
Variable costs
Indirect labor	10010	10430	420	Unfavorable
Indirect materials	5460	5680	220	Unfavorable
Utilities	3640	3460	180	Favorable
Total variable cost	19110	19570	460	Unfavorable
Fixed costs
Supervision	4400	4400	0	Neither Favorable nor unfavorable
Depreciation	1600	1600	0	Neither Favorable nor unfavorable
Property taxes	900	900	0	Neither Favorable nor unfavorable
Total fixed costs	6900	6900	0	Neither Favorable nor unfavorable
Total costs	26010	26470	460	Unfavorable