Question
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.
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 | $1.30 | |
---|---|---|
Indirect materials | 0.70 | |
Utilities | 0.40 |
Fixed overhead costs per month are Supervision $4,500, Depreciation $1,000, and Property Taxes $700. The company believes it will normally operate in a range of 6,30011,100 direct labor hours per month. Assume that in July 2020, Myers Company incurs the following manufacturing overhead costs.
Variable Costs | Fixed Costs | |||||
---|---|---|---|---|---|---|
Indirect labor | $12,140 | Supervision | $4,500 | |||
Indirect materials | 6,470 | Depreciation | 1,000 | |||
Utilities | 3,370 | Property taxes | 700 |
(a) Prepare a flexible budget performance report, assuming that the company worked 9,500 direct labor hours during the month. (List variable costs before fixed costs.)
(b) Prepare a flexible budget performance report, assuming that the company worked 8,700 direct labor hours during the month. (List variable costs before fixed costs.)
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