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 Indirect labor Indirect materials $1.30 0.60 0.40 Fixed overhead costs per month are Supervision $3,800, Depreciation $1,000, and Property Taxes $900. The company believes it will normally operate in a range of 8,100- 12,000 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. (List variable costs before fixed costs.)

Explanation / Answer

Monthly manufacturing overhead flexible budget :

Direct labour hours 8100 9400 10700 12000 Variable manufacturing overhead Indirect labour 10530 12220 13910 15600 Indirect material 4860 5640 6420 7200 Utilities 3240 3760 4280 4800 Total variable manufacturing overhead 18630 21620 24610 27600 Fixed manufacturing overhead Supervision 3800 3800 3800 3800 Depreciation 1000 1000 1000 1000 Property taxes 900 900 900 900 Total fixed manufacturing overhead 5700 5700 5700 5700 Total Manufacturing overhead 24330 27320 30310 33300

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