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Bond Company developed its annual manufacturing overhead budget for its master budget for 2014 as follows: Expected annual operating capacity 240,000 Direct Labor Hours Variable

Bond Company developed its annual manufacturing overhead budget for its master budget for 2014 as follows:

Expected annual operating capacity

240,000 Direct Labor Hours

Variable overhead costs

Indirect labor

$840,000

Indirect materials

180,000

Factory supplies

60,000

Total variable

1,080,000

Fixed overhead costs

Depreciation

360,000

Supervision

240,000

Property taxes

120,000

Total fixed

720,000

Total costs

$1,800,000

The relevant range for monthly activity is expected to be between 16,000 and 24,000 direct labor hours. Instructions Prepare a flexible budget for a monthly activity level of 16,000 direct labor hours.

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