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 | $1.10 | |
---|---|---|
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 2020, Myers Company incurs the following manufacturing overhead costs.
Variable Costs | Fixed Costs | |||||
---|---|---|---|---|---|---|
Indirect labor | $11,710 | Supervision | $4,100 | |||
Indirect materials | 7,460 | Depreciation | 2,000 | |||
Utilities | 3,860 | Property taxes | 500 |
(a) Prepare a flexible budget performance report, assuming that the company worked 10,900 direct labor hours during the month.
(b) Prepare a flexible budget performance report, assuming that the company worked 10,300 direct labor hours during the month.
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