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

Question

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 Utilities $1.00 0.70 0.30 Fixed overhead costs per month are Supervision $3,600, Depreciation $1,700, and Property Taxes $600. The company believes it will normally operate in a range of 5,600-11,000 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 $8,970 Supervision 6,240 Depreciation 2,320 Property taxes $3,600 1.700 600

Explanation / Answer

Question - a

Question - b

Budget Actual Diff FAV/UNFAV Direct Labor hours 9200 9200 Variable costs Indirect labor 9200 8970 230 FAV Indirect material 6440 6240 200 FAV Utilities 2760 2320 440 FAV Total Variable cost 18400 17530 870 FAV Fixed costs Supervison 3600 3600 0 Neither Depreciation 1700 1700 0 Neither Property taxes 600 600 0 Neither Total fixed cost 5900 5900 0 Neither Total cost 24300 23430 870 FAV

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