Question

Johnson 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 $4,200, Depreciation $1,800, and property taxes $600. The company believes it will normally operate in a range of 5,900-11,900 direct labor hours per month.

-Prepare a monthly manufacturing overhead flexible budget for 2020 for the expected range of activity, using increments of 2,000 direct labor hours.

Answer 1

Answer-

JOHNSON COMPANY
Monthly Manufacturing Overhead Flexible Budget
Direct labor hours	5900	7900	9900	11900
Variable costs:-	$	$	$	$
Indirect labor	5900 hours*$1.00 per hour=5900	7900 hours*$1.00 per hour=7900	9900 hours*$1.00 per hour=9900	11900 hours*$1.00 per hour=11900
Indirect materials	5900 hours*$0.50 per hour=2950	7900 hours*$0.50 per hour=3950	9900 hours*$0.50 per hour=4950	11900 hours*$0.50 per hour=5950
Utilities	5900 hours*$0.30 per hour=1770	7900 hours*$0.30 per hour=2370	9900 hours*$0.30 per hour=2970	11900 hours*$0.30 per hour=3570
Total variable costs (a)	10620	14220	17820	21420
Fixed costs:-
Supervision	4200	4200	4200	4200
Depreciation	1800	1800	1800	1800
Property Tax	600	600	600	600
Total fixed costs (b)	6600	6600	6600	6600
Total costs (c=a+b)	17220	20820	24420	28020