Question

Question 2 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 $1.40 Indirect materials 0.80 Utilities 0.30 Fixed overhead costs per month are Supervision $3,800, Depreciation $1,700, and Property Taxes $500. The company believes it will normally operate in a range of 7,400-11,600 direct labor hours per month Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor $14,010 $3,800 Supervision Indirect materials 8,030 Depreciation 1,700 Utilities 2,650 Property taxes 500 (a) Prepare a flexible budget performance report, assuming that the company worked 10,200 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 Budget Actual Costs
Prepare a flexible budget performance report, assuming that the company worked 9,700 direct labor hours during the month. (List variable costs before fixed costs.)

Answer 1

Answer-a)-

MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the month ended July 31,2017
Particulars	Flexible Budget	Actual Costs	Variances	Remark
	$	$	$
Variable costs:-
Indirect labor	10200 hours*$1.40 per hour=$14280	14010	270	Favorable
Indirect materials	10200 hours*$0.80 per hour=$8160	8030	130	Favorable
Utilities	10200 hours*$0.30 per hour=$3060	2650	410	Favorable
Total variable costs (a)	25500	24690	810	Favorable
Fixed costs:-
Supervision	3800	3800	0	None
Depreciation	1700	1700	0	None
Property Tax	500	500	0	None
Total fixed costs (b)	6000	6000	0	None
Total costs (c=a+b)	31500	30690	810	Favorable

b)-

MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the month ended July 31,2017
Particulars	Flexible Budget	Actual Costs	Variances	Remark
	$	$	$
Variable costs:-
Indirect labor	9700 hours*$1.40 per hour=$13580	14010	-430	Unfavorable
Indirect materials	9700 hours*$0.80 per hour=$7760	8030	-270	Unfavorable
Utilities	9700 hours*$0.30 per hour=$2910	2650	260	Favorable
Total variable costs (a)	24250	24690	-440	Unfavorable
Fixed costs:-
Supervision	3800	3800	0	None
Depreciation	1700	1700	0	None
Property Tax	500	500	0	None
Total fixed costs (b)	6000	6000	0	None
Total costs (c=a+b)	30250	30690	-440	Unfavorable