E10-3 Prepare flexible manufacturing overhead budget Myers Company uses a flexib

Question

E10-3 Prepare flexible manufacturing overhead budget

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 $4,000, depreciation, $1,200, and property taxes $800. The company believes it will normally operate in a range of 7,000 - 10,000 direct labor hours per month.

Instructions

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,000 direct labor hours.

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

MYERS COMPANY
Monthly Manufacturing Overhead Flexible Budget
For the Year 2017

Indirect labor $1.00 Indirect materials 0.70 Utilities 0.40

Explanation / Answer

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity,

Direct labour hour 7000 8000 9000 10000 Variable manufacturing overhead Indirect labor 7000 8000 9000 10000 Indirect material 4900 5600 6300 7000 Utilities 2800 3200 3600 4000 Total variable manufacturing overhead 14700 16800 18900 21000 Fixed manufacturing overhead Supervision 4000 4000 4000 4000 Depreciation 1200 1200 1200 1200 Property taxes 800 800 800 800 Total fixed manufacturing cost 2000 2000 2000 2000 Total manufacturing overhead 16700 18800 20900 23000

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