Exercise 22-4

Thome 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 0.80

Utilities 0.40

Fixed overhead costs per month are supervision $3,690, depreciation $1,813, and property taxes $709. The company believes it will normally operate in a range of 6,00011,400 direct labor hours per month.

Assume that in July 2014, Thome Company incurs the following manufacturing overhead costs.

Variable Costs

Fixed Costs

Indirect labor $10,311 Supervision $3,690

Indirect materials 7,489 Depreciation 1,813

Utilities 3,424 Property taxes 709

Prepare a flexible budget performance report, assuming that the company worked 9,600 direct labor hours during the month. (List variable costs before fixed costs.)