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		$1.00
Indirect materials		0.50
Utilities		0.30

Fixed overhead costs per month are Supervision $4,100, Depreciation $1,000, and Property Taxes $500. The company believes it will normally operate in a range of 5,800–10,600 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2020 for the expected range of activity, using increments of 1,600 direct labor hours. (List variable costs before fixed costs.)

Answer 1

Manufacturing overhead flexible budget

Activity level
Direct labor hour	5800	7400	9000	10600
Variable manufacturing overhead
Indirect labor	5800	7400	9000	10600
Indirect material	2900	3700	4500	5300
Utilities	1740	2220	2700	3180
Total variable manufacturing overhead	10440	13320	16200	19080
Fixed manufacturing overhead
Supervision	4100	4100	4100	4100
Depreciation	1000	1000	1000	1000
Property taxes	500	500	500	500
Total fixed manufacturing overhead	5600	5600	5600	5600
Total manufacturing overhead	16040	18920	21800	24680