Test Your Knowledge (2) Fox Company's management uses a flexible budget for monthly comparisons of actual and budgeted manufacturing overhead costs of the Finishing Department. The master budget for the year ending December 31, 2017, shows expected annual operating capacity of 120,000 direct labor hours and the following overhead costs. Variable Costs Indirect materials $180,000 Indirect labor 240,000 Utilities 60,000 Total $480,000 Fixed Costs Depreciation $180,000 Supervision 120,000 Property taxes 60,000 Total $360,000