Exercise 22-4 Variable Costs Fixed Costs MYERS COMPANY Manufacturing Overhead Fl
ID: 2574608 • Letter: E
Question
Exercise 22-4
Variable Costs
Fixed Costs
MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
Difference
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
Difference
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
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Exercise 22-4
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 $1.20 Indirect materials 0.80 Utilities 0.40
Fixed overhead costs per month are Supervision $3,600, Depreciation $1,000, and Property Taxes $900. The company believes it will normally operate in a range of 8,000–13,700 direct labor hours per month.
Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.
Variable Costs
Fixed Costs
Indirect labor $13,920 Supervision $3,600 Indirect materials 9,320 Depreciation 1,000 Utilities 4,240 Property taxes 900(a) Prepare a flexible budget performance report, assuming that the company worked 11,800 direct labor hours during the month. (List variable costs before fixed costs.)
MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
Difference
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
$ $ $FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
$ $ $FavorableUnfavorableNeither Favorable nor Unfavorable
(b) Prepare a flexible budget performance report, assuming that the company worked 11,200 direct labor hours during the month. (List variable costs before fixed costs.)
MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
Difference
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
$ $ $UnfavorableFavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
UnfavorableFavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
UnfavorableFavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
$ $ $UnfavorableFavorableNeither Favorable nor Unfavorable
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Explanation / Answer
Manufacturing Overhead Flexible Budget Report Budget Actual Difference Direct labor hours 11800 11800 Variable Costs Indirect Labor 14160 13920 240 Favorable Indirect Materials 9440 9320 120 Favorable Utilities 4720 4240 480 Favorable Total variable costs 28320 27480 840 Favorable Fixed costs: Supervision 3600 3600 0 Neither Favorable nor Unfavorable Depreciation 1000 1000 0 Neither Favorable nor Unfavorable Property taxes 900 900 0 Neither Favorable nor Unfavorable Total fixed costs 5500 5500 0 Neither Favorable nor Unfavorable Total costs 33820 32980 840 Favorable b Manufacturing Overhead Flexible Budget Report Budget Actual Difference Direct labor hours 11200 11200 Variable Costs Indirect Labor 13440 13920 480 Unfavorable Indirect Materials 8960 9320 360 Unfavorable Utilities 4480 4240 240 Favorable Total variable costs 26880 27480 600 Unfavorable Fixed costs: Supervision 3600 3600 0 Neither Favorable nor Unfavorable Depreciation 1000 1000 0 Neither Favorable nor Unfavorable Property taxes 900 900 0 Neither Favorable nor Unfavorable Total fixed costs 5500 5500 0 Neither Favorable nor Unfavorable Total costs 32380 32980 600 Unfavorable
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