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 $1.40 Indirect materials 0.70 Utilities 0.20 Fixed overhead costs per month are Supervision $3,700, Depreciation $1,100, and Property Taxes $600. The company believes it will normally operate in arange of 7,400-10,400 direct labor hours per month. Prepare a monthly manufacturing overhead flexible budget for 2020 for the expected range of activity, using increments of 1,000 direct labor hours. (List variable costs before fixed costs.) MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2020 $ $

Answer 1

10400 MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2020 Level of activity Direct Labor hours 7400 8400 9400 Variable cost: Indirect labor 10360 11760 13160 Indirect material 5180 5880 6580 Utilities 1480 1680 1880 Total variable costs 17020 19320 21620 Fixed costs Supervision 3700 3700 3700 Depreciation 1100 11001 11001 Property taxes 600 600 600 Total Fixed costs 5400 5400 Total Manufacturing overhead costs 22420 24720 27020 14560 7280 2080 23920 3700 1100 6001 5400) 5400 29320 Working notes for Variable cost : Indirect labor cost per unit * Direct labor hours per month Indirect material cost per unit * Direct labor hours per month Utilities cost per unit * Direct labor hours per month