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 $1.10

Indirect materials $0.70

Utilities $0.40

Fixed overhead costs per month are Supervision $3,600, Depreciation $1,800, and Property Taxes $800. The company believes it will normally operate in a range of 7,700–11,000 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2020 for the expected range of activity, using increments of 1,100 direct labor hours. (List variable costs before fixed costs.)

Answer 1

DLH 8,800 DLH 9,900 DLH 11,000 10,890 6,930 Monthly manufacturing overhead flexible budget for 2020 :- Particulars DLH 7,700 Variable manufacturing overhead costs :- Indirect labor 8,470 Indirect material 5,390 Utilities 3,080 Total variable manufacturing overhead 16,940 Fixed overhead costs :- Supervision 3,600 Depreciation 1,800 Property taxes 900 Total fixed overhead cost 6,300 Total Manufacturing overhead 23,240 9,680 6,160 3,520 19,360 12,100 7,700 4,400 24,200 3,960 21,780 3,600 1,800 3,600 1,800 900 3,600 1,800 900 900 6,300 6,300 6,300 28,080 25,660 30,500