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 $1.00 Indirect labor Indirect materials 0.60 Utilities 0.40 Fixed overhead costs per month are Supervision $3,700, Depreciation $1,800, and Property Taxes $600. The company believes it will normally operate in a range of 7,600-10,900 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs $3,700 $9,570 Supervision Indirect labor 5,720 Depreciation Indirect materials 1,800 Utilities 3,520 Property taxes 600 (a) Prepare a flexible budget performance report, assuming that the company worked 9,800 direct labor hours during the month. (List variable costs before fixed costs.)
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 $1.00 Indirect materials 0.60 Utilities 0.40 Fixed overhead costs per month are Supervision $3,700, Depreciation $1,800, and Property Taxes $600. The company believes it will normally operate in a range of 7,600–10,900 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.

Answer 1

Solution:

Myers Company
Manufacturing overhead flexible budget report (9800 Direct labor hours)
For the month ended July 31, 2017
Particulars	Budget	Actual cost	Difference	Favorable / Unfavorable / Neither favorable nor unfavorable
Nos of hours worked	9800	9800
Variable overhead costs:
Indirect labor	$9,800.00	$9,570.00	$230.00	Favorable
Indirect Materials	$5,880.00	$5,720.00	$160.00	Favorable
Utilities	$3,920.00	$3,520.00	$400.00	Favorable
Total Variable overhead cost	$19,600.00	$18,810.00	$790.00	Favorable
Fixed overhead costs:
Supervision	$3,700.00	$3,700.00	$0.00	Neither Favorable nor Unfavorable
Depreciation	$1,800.00	$1,800.00	$0.00	Neither Favorable nor Unfavorable
Property Taxes	$600.00	$600.00	$0.00	Neither Favorable nor Unfavorable
Total Fixed overhead cost	$6,100.00	$6,100.00	$0.00	Neither Favorable nor Unfavorable
Total Overhead Cost	$25,700.00	$24,910.00	$790.00	Favorable