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 $1.00 0.80 0.20 Fixed overhead costs per month are Supervision $4,500, Depreciation $1,400, and Property Taxes $700. The company believes it will normally operate in a range of 7,800-12,900 direct labor hours per month. Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,700 direct labor hours. (List variable costs before fixed costs.)

Answer 1

12900 MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2017 Level of activity Direct Labor hours 7800 9500 11200 Variable cost: Indirect labor 7800 9500 11200 Indirect material 6240 7600 8960 Utilities 1560 1900 2240 Total variable costs 156000 19000 22400 Fixed costs Supervision 4500 4500 4500 Depreciation 1400 1400 1400 Property taxes 700 700 Total Fixed costs 6600 6600 6600 Total Manufacturing overhead costs 22200 25600 29000 12900 10320 2580 25800 700 4500 1400 700 6600 32400 Working notes for Variable cost : Indirect labor cost per unit * Direct labor hours per month Indirect material cost per unit * Direct labor hours per month Utilities cost per unit * Direct labor hours per month