1 24.4 Prebare flexible budest reports for manufacturing overhead costs, and comment on findings 2 home Company uses a flexible budget for manufacturing overhead based on direct labor hours. 3 ariable manufacturing overhead costs per direct labor hour are as follows. Indirect labor $1.00 Indirect materials 0.60 Utilities 0.40 9 fixed overhead costs per month are supervision $4,000, depreciation, $1,200, and property taxes $800. 10 The company believes it will normally operate in a range of 7,000 - 10,000 direct labor hours per month. 11 12 Using the information above, assume that in July 2014, Thome Company Incurs the following manufacturing 13 overhead costs. 14 15 Variable costs Fixed Costs 16 Indirect labor $ 8,800 Supervision $ 4,000 17 Indirect materials 5,300 Depreciation 1,200 18 Utilities 3,200 Property taxes 800 19 20 nstructions 21 a) Prepar a flexible budget performance report, assuming that the company worked 9,000 direct labor hours 22 during the month. 23 b) Prepare a flexible budget performance report, assuming that the company worked 8,500 direct labor hours 24 during the month. 25 c) Comment on your findings. 26 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". 27 28 THOME COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2014 28 29 30 (la) 31 32 33 34 35 36 37 38 39 Budget at 9,000 DLH Actual Costs 9,000 DUH Difference Favorable F Unfavorable U Value Value Value 40 Direct labor hours (DUA) Variable costs Indirect labor Indirect materials Utilities Total variable costs Fixed costs Supervision Depreciation Property taxes Total fixed costs Value Value Value ? Value Value Value ? ? 42 43 Value Value Value 2 Value Value Value Value Value Value ? Total costs 55 06 7 8 9 0 1 2 (b) ? ? THOME COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2014 Budget at 8,500 DLH Actual Costs 8,500 DLH Difference Favorable F Unfavorable U Value Value Value Direct labor hours (DLH) Variable costs Indirect labor ($1.00) Indirect materials (50.60) Utilities (50.40) Total variable costs ($2.00) Fixed costs Supervision Depreciation Property taxes Total fixed costs Value Value Value 2 Value Value Value ? 2 Value Value Value .? Value Value Value ? Value Value Value 22 Total costs