Question
**PLEASE ANSWER A & B** Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct
**PLEASE ANSWER A & B**
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 | $1.20 | |
---|---|---|
Indirect materials | 0.80 | |
Utilities | 0.40 |
Fixed overhead costs per month are Supervision $3,500, Depreciation $1,300, and Property Taxes $700. The company believes it will normally operate in a range of 5,5008,500 direct labor hours per month. Assume that in July 2020, Myers Company incurs the following manufacturing overhead costs.
Variable Costs | Fixed Costs | |||||
---|---|---|---|---|---|---|
Indirect labor | $8,720 | Supervision | $3,500 | |||
Indirect materials | 5,830 | Depreciation | 1,300 | |||
Utilities | 2,590 | Property taxes | 700 |
(a) Prepare a flexible budget performance report, assuming that the company worked 7,500 direct labor hours during the month.
(b) Prepare a flexible budget performance report, assuming that the company worked 6,800 direct labor hours during the month.
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