Exercise 24-4 Thome Company uses a flexible budget for manufacturing overhead ba

Question

Exercise 24-4 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 $1.00 0.80 0.40 Fixed overhead costs per month are supervision $4,311, depreciation $1,203, and property taxes $635. The company believes it will normally operate in a range of 7,300-10,900 direct labor hours per month Assume that in July 2014, Thome Company incurs the following manufacturing overhead costs Variable Costs Costs Indirect labor Indirect materials Utilities $4,311 1,203 635 $9,462 Supervision 7,654 Depreciation 3,411 Property taxes

Explanation / Answer

THOME COMPANY MANUFACTURING OVERHEAD FLEXIBLE BUDGET REPORT FOR THE MONTH ENDED JULY 31, 2014 Budget Actuals Difference Direct Labor Hours (DLH) 9700 9700 Variable costs: indirect labor 9700 9462 238 F indirect materials 7760 7654 106 F utilities 3880 3411 469 F Total variable costs 21340 20527 813 F Fixed costs: supervision 4311 4311 0 N depreciation 1203 1203 0 N property taxes 635 635 0 N 6149 6149 0 N TOTAL MFG OVERHEAD COSTS 27489 26676 813 F

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