Question

Ex. 186 Webb, Inc. uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows: Indirect labor $5.00 Indirect materials 2.50 Maintenance 50 Utilities 30 Fixed overhead costs per month are: Supervision $1,200 Insurance 400 Property taxes Depreciation The company believes it will normally operate in a range of 4,000 to 8,000 machine hours per month During the month of August, 2016, the company incurs the following manufacturing overhead costs: Indirect labor $28,000 Indirect materials 16,200 Maintenance Utilities 1.900 Supervision Insurance Property taxes Depreciation 600 1,800 2.800 Instructions Prepare a flexible budget report, assuming that the company used 6,000 machine hours during August. US) E E E D Foc

Answer 1

Webb Inc. Flexible Budget Report: Manufacturing Overhead For the month of August
	Flexible Budget	Actual Results	Spending Variances
Activity Level in Machine Hours	6,000	6,000
Variable Manufacturing Overhead
Indirect Labor	$ 30,000	$ 28,000	$ 2,000 F
Indirect Materials	15,000	16,200	1,200 U
Maintenance	3,000	2,800	200 F
Utilities	1,800	1,900	100 U
Total Variable Manufacturing Overhead	49,800	48,900	900 F
Fixed Manufacturing Overheads
Supervision	1,200	1,440	240 U
Insurance	400	400	None
Property Taxes	600	600	None
Depreciation	1,800	1,860	60 U
Total Fixed Manufacturing Overhead	4,000	4,300	300 U
Total Manufacturing Overhead	$ 53,800	$ 53,200	$ 600 F