Answers: Exercise 22-3 Thome Company uses a flexible budget for manufacturing ov

Question

Answers: Exercise 22-3 Thome 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 Indirect materials Utiities $1.30 0.80 0.30 Fixed overhead costs per month are supervision $3,624, depreciation $1,582, and property taxes $544. The company believes it will normally operate in a range of 8,100- 13,800 direct labor hours per month. Prepare a monthly manufacturing overhead nesible budget for 2014 for the expected range of activit% using increments of 1,900 direct labor hours. (1 isr variable costs before fixed costs.)

Explanation / Answer

Thomas Company Flexible Monthly Manufacturing Overhead Budget Flexible Budgets for hours Details Cost Formula      8,100      10,000      11,900 13,800 Variable Manufacturing Overhead per Direct Labor Hour Indirect Labor           1.30    10,530      13,000      15,470 17,940 Indirect Material           0.80      6,480        8,000        9,520 11,040 Utilities           0.30      2,430        3,000        3,570     4,140 Total Variable cost per Direct Labor Hour           2.40    19,440      24,000      28,560 33,120 Fixed Manufacturing Overhead/Month Supervision         3,624      3,624        3,624        3,624     3,624 Depreciation         1,582      1,582        1,582        1,582     1,582 Propert Taxes             544          544            544            544         544 Total Fixed Overhead per month         5,750      5,750        5,750        5,750     5,750 Total Manufacturing Overhead    25,190      29,750      34,310 38,870

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