Exercise 22-4 Thome Company uses a flexible budget for manufacturing overhead ba
ID: 2482746 • Letter: E
Question
Exercise 22-4 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 Utilities $1.10 0.80 0.30 Fixed overhead costs per month are supervision $3,969, depreciation $1,145, and property taxes $689. The company believes it will normally operate in a range of 7,300-13,300 direct labor hours per month Assume that in July 2014, Thome Company incurs the following manufacturing overhead costs Variable Costs Fixed Costs Indirect labor Indirect materials Utilities $3,969 1,145 689 $12,157 Supervision 8,910Depreciation 2,901 Property taxes Your answer is partially correct. Try agairn Prepare a flexible budget performance report, assuming that the company worked 11,300 direct labor hours during the month. (List variable costs before fixed costs.) THOME COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2014 Difference Favorable (F) Unfavorable (U) Neither Favorable nor Unfavorable (N Budget Actual Costs Direct Labor Hours 11.300 E 11,300 Variable Costs Indirect Labor 8030 14630 6600 Indirect Materials 5840 10640 4800 U Utilities 2190 3990 1800Explanation / Answer
Thome Company
Flexible Budget Performance Report
For the month ended July 31, 2014
Budget Actual costs Variance Variance Indicator Direct labor hours 11,300 11,300 Variable costs Indirect labor 12,430 12,157 273 F Indirect materials 9,040 8,910 130 F Utilities 3,390 2,901 489 F Total variable costs 24,860 23,968 892 F Fixed costs Supervision 3,969 3,969 None Depreciation 1,145 1,145 None Property taxes 689 689 None Total fixed costs 5,803 5,803 None Total manufacturing overhead cost 30,663 29,771 892 FRelated Questions
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