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		$1.00
Indirect materials		0.50
Utilities		0.30

Fixed overhead costs per month are Supervision $4,400, Depreciation $1,100, and Property Taxes $900. The company believes it will normally operate in a range of 7,500 – 10,500 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,000 direct labor hours. (List variable costs before fixed costs.)

MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2017

Answer 1

Manufacturing overhead flexible budget

Activity level
Direct labor hour	7500	8500	9500	10500
Variable manufacturing overhead
Indirect labor	7500	8500	9500	10500
Indirect material	3750	4250	4750	5250
Utilities	2250	2550	2850	3150
Total variable manufacturing overhead	13500	15300	17100	18900
Fixed manufacturing overhead
Supervision	4400	4400	4400	4400
Depreciation	1100	1100	1100	1100
Property taxes	900	900	900	900
Total fixed manufacturing overhead	6400	6400	6400	6400
Total manufacturing overhead	19900	21700	23500	25300