Miyers Company uses a flexible budget for manufacturing overhead based on direct

Question

Miyers 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 $1.40 0.70 0.20 Fixed overhead costs per month are supervision $3,700, Depreciation $1,100, and Property Taxes $600. The company believes it will normally operate in a range of 7,400-10,400 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

Explanation / Answer

Activity level Direct labor hours 7400 8400 9400 10400 Variable costs: Indirect labor 10360 11760 13160 14560 Indirect materials 5180 5880 6580 7280 Utilities 1480 1680 1880 2080 Total variable cost 17020 19320 21620 23920 Fixed costs Supervision 3700 3700 3700 3700 Depreciation 1100 1100 1100 1100 Property taxes 600 600 600 600 Total fixed costs 5400 5400 5400 5400 Total costs 22420 24720 27020 29320

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