Question 1 Myers Company uses a flexible budget for manufacturing overhead based

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Question 1 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 $1.10 0.50 0.40 Fixed overhead costs per month are Supervision $3,900, Depreciation $1,100, and Property Taxes $700. The company believes it will normally operate in a range of 5,900-9,800 direct labor hours per month Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs Variable Costs Fixed Costs Indirect labor Indirect materials Utilities $3,900 1,100 700 $9,050 Supervision 4,070 Depreciation 2,990 Property taxes (a) Prepare a flexible budget performance report, assuming that the company worked 8,500 direct labor hours during the month. (List variable costs before fixed costs.) MYERS COMPANY

Explanation / Answer

a. Flexible Budget Performance Report is as prepared below:

8,500 direct labour hours

b. 7,800 hours

MYERS COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2017 Budget Actual   Difference Direct labour hours 8,500 8,500 Variable Costs: Indirect material 4,250 4,070 180 F Indirect labour 9,350 9,050 300 F Utilities 3,400 2,990 410 F Total variable costs 17,000 16,110 890 F Fixed Costs: Supervision 3,900 3,900 0 None Depreciation 1,100 1,100 0 None Property taxes 700 700 0 None Total fixed costs 5,700 5,700 0 None Total costs 22,700 21,810 890 F

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