Myers Company uses a flexible budget for manufacturing overhead based on direct

Question

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.

Fixed overhead costs per month are Supervision $4,200, Depreciation $1,500, and Property Taxes $800. The company believes it will normally operate in a range of 5,900–9,800 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,300 direct labor hours

Indirect labor $1.20 Indirect materials 0.70 Utilities 0.40

Explanation / Answer

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,300 direct labor hours

Direct labour hours 5900 7200 8500 9800 Variable manufacturing overhead Indirect labor 7080 8640 10200 11760 Indirect material 4130 5040 5950 6860 Utilities 2360 2880 3400 3920 Total variable manufacturing overhead 13570 16560 19550 22540 Fixed manufacturing overhead Supervision 4200 4200 4200 4200 Depreciation 1500 1500 1500 1500 Property tax 800 800 800 800 Total Fixed manufacturing overhead 6500 6500 6500 6500 Total manufacturing overhead 20070 23060 26050 29040

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