Question

Myers Compay uss a floi ble budget for manufacturing overhead based on direct labor haurs. Varlable manutacturing overhead costs per direct labor haur are as follows Indirect labor $1.10 Indirect materials 0.60 Utlitles D.40 Fixed overhead costs per month are Supervision $4,400. Depreciation $1600. and Property Taxes $900 The compary believes it will normaly operate in a range of 6,500-11.300 direct laber hours per month Assume that in July 2017, Myers Company incurs the following manufacturing overhead oosts Variable Casts Fiaed Costs Indirect labor $10430 5unervision $4A00 Indirect materlals S,680 Depredation 1600 Utilities 3460 Property taxes 900 Jal Prepare a flexible budeet performance report, assuming that the oompany worked 9700 direct labor hours during the month (List varlable casts before fwed costs. MYERS COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2017 Difference Favorable Unfavarable Neither Fayorable Actual Costs nor Unfavorable Budget $ b) Prepare a flexible budget performance report, assuming that the comparny worked 9.100 direct labor hours during the month. (List variable costs before fxed costs.) MYERS COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs S $

Answer 1

a.			Budget	Actual costs	Differences
	Direct labor hours	(q)	9,700	9,700	-	Neither favorable nor unfavorable
	Variable costs:
	Indirect labor	1.10 q	10,670	$ 10,430	240	Favorable
	Indirect material	0.60 q	$    5,820	$    5,680	140	Favorable
	Utilities	0.40 q	$    3,880	$    3,460	420	Favorable
	Total Variable cost		$ 20,370	$ 19,570	800	Favorable
	Fixed costs
	Supervision		$    4,400	$    4,400	-	Neither favorable nor unfavorable
	Depreciation		$    1,600	$    1,600	-	Neither favorable nor unfavorable
	Property taxes		$        900	$        900	-	Neither favorable nor unfavorable
	Total Fixed costs		$    6,900	$    6,900	-	Neither favorable nor unfavorable
	Total costs		$ 27,270	$ 26,470	800	Favorable
b.			Budget	Actual costs	Differences
	Direct labor hours	(q)	9,100	9,100	-	Neither favorable nor unfavorable
	Variable costs:
	Indirect labor	1.10 q	10,010	$ 10,430	420	Unfavorable
	Indirect material	0.60 q	$    5,460	$    5,680	220	Unfavorable
	Utilities	0.40 q	$    3,640	$    3,460	180	Favorable
	Total Variable cost		$ 19,110	$ 19,570	460	Unfavorable
	Fixed costs
	Supervision		$    4,400	$    4,400	-	Neither favorable nor unfavorable
	Depreciation		$    1,600	$    1,600	-	Neither favorable nor unfavorable
	Property taxes		$        900	$        900	-	Neither favorable nor unfavorable
	Total Fixed costs		$    6,900	$    6,900	-	Neither favorable nor unfavorable
	Total costs		$ 26,010	$ 26,470	460	Unfavorable

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