Question

Blue 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 $1.30 Indirect materials 0.80 Utilities 0.30 Fixed overhead costs per month are Supervision $4,300, Depreciation $2,000, and Property Taxes $600. The company believes it will normally operate in a range of 6,100–10,000 direct labor hours per month. Assume that in July 2017, Blue Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor $11,050 Supervision $4,300 Indirect materials 6,790 Depreciation 2,000 Utilities 2,180 Property taxes 600

(a) Prepare a flexible budget performance report, assuming that the company worked 8,700 direct labor hours during the month. (List variable costs before fixed costs.) BLUE COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2017July 31, 2017For the Year Ended July 31, 2017 Difference Budget Actual Costs Favorable/Unfavorable Neither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs $ $ $ FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs FavorableUnfavorableNeither Favorable nor Unfavorable DepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs $ $ $ FavorableUnfavorableNeither Favorable nor Unfavorable Click if you would like to Show Work for this question: Open Show Work

Answer 1

BLUE COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
	Budget	Actual Costs	Difference
Direct Labor Hours	8700	8700
Variable Costs
Indirect labor	11310	11050	260	Favorable
Indirect materials	6960	6790	170	Favorable
Utilities	2610	2180	430	Favorable
Total Variable Costs	20880	20020	860	Favorable
Fixed Costs
Supervision	4300	4300	0	Neither Favorable nor Unfavorable
Depreciation	2000	2000	0	Neither Favorable nor Unfavorable
Property taxes	600	600	0	Neither Favorable nor Unfavorable
Total Fixed Costs	6900	6900	0	Neither Favorable nor Unfavorable
Total costs	27780	26920	860	Favorable
Workings:
Variable Costs
Indirect labor	11310	=8700*1.30
Indirect materials	6960	=8700*0.80
Utilities	2610	=8700*0.30