Exercise 22-3 Myers Company uses a flexible budget for manufacturing overhead ba

Question

Exercise 22-3 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 Indirect materials Utilities $1.40 0.60 0.40 Fixed overhead costs per month are Supervision $3,900, Depreciation $1,700, and Property Taxes $600. The company believes it will normally operate in a range of 8,200 -13,300 direct labor hours per month Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,700 direct labor hours. (List variable costs before fixed costs.)

Explanation / Answer

MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2017 Activity level Direct labor hours 8200 9900 11600 13300 Variable costs Indirect labour ($1.40) 11480 13860 16240 18620 Indirect materials(0.60) 4920 5940 6960 7980 Utilities(0.40) 3280 3960 4640 5320 Total variable cost($2.40) 19680 23760 27840 31920 Fixed costs Supervision 3900 3900 3900 3900 Depreciation 1700 1700 1700 1700 Property taxes 600 600 600 600 Total fixed costs 6200 6200 6200 6200 Total costs($) 25880 29960 34040 38120

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