Question
Novak Company uses a flexible budget for manufacturing overhead based on direct labor hours. Budgeted variable manufacturing overhead costs per direct labor hour are as
Novak Company uses a flexible budget for manufacturing overhead based on direct labor hours. Budgeted variable manufacturing overhead costs per direct labor hour are as follows.
Indirect labor | $ 1.00 | |
Indirect materials | 0.70 | |
Utilities | 0.40 |
Budgeted fixed overhead costs per month are Supervision $ 4,000, Depreciation $ 1,200, and property Taxes $ 800. The company believes it will normally operate in a range of 7,000 10,000 direct labor hours per month. Assume that in July 2022, Novak Company incurs the following manufacturing overhead costs.
Variable Costs | Fixed Costs | |||||
---|---|---|---|---|---|---|
Indirect labor | $ 8,976 | Supervision | $ 4,000 | |||
Indirect materials | 5,916 | Depreciation | 1,200 | |||
Utilities | 3,264 | Property taxes | 800 |
(a) Prepare a flexible budget performance report, assuming that the company worked 9,000 direct labor hours during the month. (List variable costs before fixed costs.)
(b) Prepare a flexible budget performance report, assuming that the company worked 8,670 direct labor hours during the month. (List variable costs before fixed costs.)
Budget Actual Costs nor Unfavc Direct Labor Hours v 9000 9000 Variable Costs Indirect Labor $ 8,976 $ 9,000 $ Indirect Materials 5,916 $9,000 Utilities 3,264 $6,300 Total Variable Costs $3,600 Fixed Costs Supervision 4,000 4,000 4,000 Depreciation 1,200 1.200 1,200 Property Taxes 800 800 800 Total Fixed Costs 6,000 6,000 6,000 Total Costs $ $ $ Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs $ $ $ ta $ $ Property Taxes Total Costs Indirect Materials Direct Labor Hours Variable Costs Indirect Labor Total Fixed Costs Utilities Total Variable Costs Depreciation Fixed Costs SupervisionStep by Step Solution
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