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 0.90 0.40 Fixed overhead costs per month are Supervision $ 4,200, Depreciation $ 1,900, and Property Taxes $ 900. The company believes it will normally operate in a range of 7,000 12,100 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor Indirect materials Utilities 4,200 1,900 900 s 11,210 Supervision 9,220 Depreciation 3,740 Property taxes (a) Prepare a flexible budget performance report, assuming that the company worked 10,400 direct labor hours during the month. (List variable costs before fixed costs.) MYERS COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Bud Actual Costs

Answer 1

Part A

MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
					Difference
					Favorable
					Unfavorable
			Budget	Actual Costs	Neither Favorable nor Unfavorable
	Direct Labor Hours		10400	10400
	Variable Costs
	Indirect Labor		$                               11,440	$       11,210	$                                                         230.00		Favorable
	Indirect Materials		$                                  9,360	$          9,220	$                                                         140.00		Favorable
	Utilities		$                                  4,160	$          3,740	$                                                         420.00		Favorable
	Total Variable Costs		$                               24,960	$       24,170	$                                                         790.00		Favorable
	Fixed Costs
	Supervision		$                                  4,200	$          4,200	$                                                                  -		Neither
	Depreciation		$                                  1,900	$          1,900	$                                                                  -		Neither
	Property Taxes		$                                     900	$             900	$                                                                  -		Neither
	Total Fixed Costs		$                                  7,000	$          7,000	$                                                                  -		Neither
	Total Costs		$                               31,960	$       31,170	$                                                         790.00		Favorable

NOTES:

	Budgeted Costs
	Units	Costs	Unit * cost
Indirect Labor	10400	$       1.10	$   11,440.00
Indirect Materials	10400	$       0.90	$      9,360.00
Utilities	10400	$       0.40	$      4,160.00

Ques b

MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
					Difference
					Favorable
					Unfavorable
			Budget	Actual Costs	Neither Favorable nor Unfavorable
	Direct Labor Hours		9800	9800
	Variable Costs
	Indirect Labor		$                               10,780	$       11,210	$                                                      (430.00)		Unfavorable
	Indirect Materials		$                                  8,820	$          9,220	$                                                      (400.00)		Unfavorable
	Utilities		$                                  3,920	$          3,740	$                                                         180.00		Favorable
	Total Variable Costs		$                               23,520	$       24,170	$                                                      (650.00)		Unfavorable
	Fixed Costs
	Supervision		$                                  4,200	$          4,200	$                                                                  -		Neither
	Depreciation		$                                  1,900	$          1,900	$                                                                  -		Neither
	Property Taxes		$                                     900	$             900	$                                                                  -		Neither
	Total Fixed Costs		$                                  7,000	$          7,000	$                                                                  -		Neither
	Total Costs		$                               30,520	$       31,170	$                                                      (650.00)		Unfavorable

Notes

	Budgeted Costs
	Units	Costs	Unit * cost
Direct Labor Hours	9800	$       1.10	$   10,780.00
Variable Costs	9800	$       0.90	$      8,820.00
Indirect Labor	9800	$       0.40	$      3,920.00