Cody Co. developed its annual manufacturing overhead budget for its master budget for 2016 as follows:

Expected annual operating capacity 120,000 Direct Labor Hours

Variable overhead costs

Indirect labor $600,000

Indirect materials 120,000

Factory supplies 60,000

Total variable 780,000

Fixed overhead costs

Depreciation 240,000

Supervision 120,000

Property taxes 96,000

Total fixed 456,000

Total costs $1,236,000

The relevant range for monthly activity is expected to be between 8,000 and 12,000 direct labor hours.

Instructions.

Prepare a flexible budget for a monthly activity level of 8,000 and 9,000 direct labor hours