Question

Webb, Inc. uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows: $5.00 2.50 Indirect labor Indirect materials Maintenance Utilities .50 .30 Fixed overhead costs per month are: Supervision Insurance Property taxes Depreciation $1,200 400 600 1,800 The company believes it will normally operate in a range of 4,000 to 8,000 machine hours per month. During the month of August, 2019, the company incurs the following manufacturing overhead costs: Indirect labor Indirect materials Maintenance Utilities Supervision Insurance Property taxes Depreciation $28,000 16,200 2,800 1,900 1,440 400 600 1,860 Prepare a flexible budget report, assuming that the company used 6,000 machine hours during August. (List variable costs before fixed costs.) WEBB, INC. Manufacturing Overhead Budget Report (Flexible) For the Month Ended August 31, 2019 Difference Favorable (F) Budget at Actual at Unfavorable (U) 6,000 hrs. 6,000 hrs. Not Applicable (NA)

Answer 1

WEBB, INC. Manufacturing Overhead Budget Report (Flexible) For the Month Ended August 31, 2019 Budget at Actual at Difference 6,000 hours 6,000 hours Variable costs: Indirect labor $ 30,000$ 28,000 $ 2,000 F Indirect materials $ 15,000 $ 16,200 $ 1,200 U Maintenance $ 3,000 $ 2,800 $ 200 F Utilities $ 1,800 $ 1,900 Total variable costs $ 49,800 $ 48,900 $ 900 F Fixed costs: Supervision 1,200 $ 1,440$ Insurance 400 $ 400 $ NA Property taxes $ 600 $ 600 $ Depreciation $ 1,800 $ 1,860 $ 60U Total fixed costs $ 4,000 $ 4,300 $ 300 u Total costs $ 53,800 $ 53,200 $ 600 100 U