Manufacturing overhead flexible budget and overhead rate Below are summarized cost be- havior data for the manufacturing overhead activities of a small firm. The company uses units of output as its measure of activity and as the base for applying manufacturing overhead to products.

REQUIRED

a. Prepare a flexible budget for manufacturing overhead costs for 30,000,40,000, and 50,000 units of activity.

b. If 40,000 units is the normal capacity, determine the manufacturing overhead rate for the period.

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Variable Fixed Cost Per Costs Unit Indirect material ... $3,500 $ .40 Indirect labor.... 4,000 .30 Factory utilities 8,000 .15 Factory insurance 3,600 Factory property taxes 12,900 Maintenance 5,000 .15 Depreciation, manufacturing equipment 10,000 Depreciation, manufacturing plant..... 14,000 Employee benefits..... .60 First aid room 4,000 .05 Cafeteria for the manufacturing plant 8,000 .35 Manufacturing supervisory salaries.... 26,000 .20