Exercise 22-4 Your answer is partially correct. Try again. Myers Company uses a

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Exercise 22-4 Your answer is partially correct. Try again. 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 $1.10 Indirect materials 0.90 Utilities 0.40 Fixed overhead costs per month are Supervision $4,200, Depreciation $1,900, and Property Taxes $900. The company believes it will normally operate in a range of 7,000–12,100 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor $11,210 Supervision $4,200 Indirect materials 9,220 Depreciation 1,900 Utilities 3,740 Property taxes 900 (a) Prepare a flexible budget performance report, assuming that the company worked 10,400 direct labor hours during the month. (List variable costs before fixed costs.)

(a) Prepare a flexible budget performance report, assuming that the company worked 10,400 direct labor hours during the month. (List variable costs before fixed costs.) MYERS COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs Direct Labor Hours 12,100 10,400 Variable Costs 2100 Favorable 1680 Favorable 1180 Favorable Indirect Labor 13310 11,210 Indirect Materials 10890 9220 Utilities 4840 3740 Total Variable Costs 29040 24170 4960 Favorable Fixed Costs Supervision Depreciation Property Taxes Total Fixed Costs V Total Costs

Explanation / Answer

a) Myers Company Flexible budget Budget Actual             difference costs direct labor hours 10,400 10,400 variable costs Indirect labor 1.1 11440 11,210 230 F indirect materials 0.9 9360 9,220 140 F utilities 0.4 4160 3,740 420 F total variable costs 24960 24,170 790 F fixed cost supervision 4,200 4,200 0 N Depreciation 1,900 1,900 0 N property taxes 900 900 0 N total fixed cost 7,000 7,000 0 N total cost 31,960 31,170 790 F b) Myers Company Budget Actual             difference costs direct labor hours 9,800 9,800 variable costs Indirect labor 1.1 10780 11,210 430 U indirect materials 0.9 8820 9,220 400 U utilities 0.4 3920 3,740 180 F total variable costs 23520 24,170 650 U fixed cost supervision 4,200 4,200 0 N Depreciation 1,900 1,900 0 N property taxes 900 900 0 N total fixed cost 7,000 7,000 0 N total cost 30,520 31,170 650 U

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