Raney Company uses a flexible budget for manufacturing overhead that is based on direct labour hours. The variable manufacturing overhead costs per direct labour hour are as follows:

Indirect labour $0.70

Indirect materials 0.50

Utilities 0.40

Fixed overhead costs per month are as follows: supervision $4,000; depreciation $1,500; and property taxes $800. The company believes it will normally operate in a range of 7,000 to 10,000 direct labour hours per month. Instructions Prepare a monthly flexible manufacturing overhead budget for 2022 for the expected range of activity, using increments of 1,000 direct labour hours.

Prepare flexible budget reports for manufacturing overhead costs, and comment on findings.