Question
Exercise 22-4 Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are
Exercise 22-4 Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hour are as follows.
Indirect labor $1.10
Indirect materials 0.70
Utilities 0.40
Fixed overhead costs per month are Supervision $4,100, Depreciation $2,000, and Property Taxes $500. The company believes it will normally operate in a range of 7,10012,800 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.
(a.) Prepare a flexible budget performance report, assuming that the company worked 10,900 direct labor hours during the month. (List variable costs before fixed costs.) (b) Prepare a flexible budget performance report, assuming that the company worked 10,300 direct labor hours during the month. (List variable costs before fixed costs.)
Variable Costs Fixed Costs Indirect labor Indirect materials Utilities $4,100 2,000 500 $11,710 Supervision 7,460 Depreciation 3,860 Property taxes Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs
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