Q2: Raney 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 0.60

Utilities 0.50

Fixed overhead costs per month are: Supervision $4,000, Depreciation $1,500, and Property Taxes $800.The company believes it will normally operate in a range of 7,00010,000 direct labor hours per month.

Instructions

Prepare a monthly manufacturing overhead flexible budget for 2010 for the expected range of activity, using increments of 1,050 direct labor hours.