Raney Company uses a flexible budget for manufacturing overhead based on direct
ID: 2434680 • Letter: R
Question
Raney Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead costs per direct labor hours are as follows:Indirect Labor $1.00
Indirect materials 0.50
Utilities 0.40
Fixed Overhead costs per month are: supervisor $4,000, Depreciation $1,500, and Property Taxes $800. The company believes it will normally operate in a range of 7,000 – 10,000 direct labor hours per month.
INSTRUCTIONS:
Prepare a monthly manufacturing overhead flexible budget for 2008 for the expected range of activity, using increments of 1,000 direct labor hours.
Explanation / Answer
Flexible budget for manufacting over heads Particulars 7000hrs 8000hrs 9000hrs 10000hrs $ $ $ $ Indirect labor&indirect materials utilities($1+$0.5+0.4)$1.90 13300 15200 17100 19000 Fixed over heads Supervisior 4000 4000 4000 4000 Depreciation 1500 1500 1500 1500 Property taxes 800 800 800 800 19600 21500 23400 25300