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 0.40 Fixed overhead costs per month are Supervision $4,200, Depreciation $1,800, and Property Taxes $600. The company believes it will normally operate in a range of 7,000-13,000 direct labor hours per month Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor $10,760 Supervision $4,200 Indirect materials 7,520 Depreciation 1,800 Utilities 3,950 Property taxes 600 (a) Prepare a flexible budget performance report, assuming that the company worked 11,000 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 Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs

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Answer 1

Answer-a)-

SHEFFIELD COMPANY
Manufacturing Overhead Flexible Budget Report
For the month ended July 31,2017
Particulars	Flexible Budget	Actual Costs	Variances	Remark
11000 Direct Labor Hours	$	$	$
Variable costs:-
Indirect labor	11000 hours*$1.00 per hour=11000	10760	240	Favorable
Indirect materials	11000 hours*$0.70 per hour=7700	7520	180	Favorable
Utilities	11000 hours*$0.40 per hour=4400	3950	450	Favorable
Total variable costs (a)	23100	22230	870	Favorable
Fixed costs:-
Supervision	4200	4200	0	None
Depreciation	1800	1800	0	None
Property Tax	600	600	0	None
Total fixed costs (b)	6600	6600	0	None
Total cost (c=a+b)	29700	28830	870	Favorable

b)-

SHEFFIELD COMPANY
Manufacturing Overhead Flexible Budget Report
For the month ended July 31,2017
Particulars	Flexible Budget	Actual Costs	Variances	Remark
10300 Direct Labor Hours	$	$	$
Variable costs:-
Indirect labor	10300 hours*$1.00 per hour=10300	10760	-460	Unfavorable
Indirect materials	10300 hours*$0.70 per hour=7210	7520	-310	Unfavorable
Utilities	10300 hours*$0.40 per hour=4120	3950	170	Favorable
Total variable costs (a)	21630	22230	-600	Unfavorable
Fixed costs:-
Supervision	4200	4200	0	None
Depreciation	1800	1800	0	None
Property Tax	600	600	0	None
Total fixed costs (b)	6600	6600	0	None
Total cost (c=a+b)	28230	28830	-600	Unfavorable