Myers Company uses a flexible budget for manufacturing overhead based on direct
ID: 2532322 • Letter: M
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 $1.20
Indirect materials 0.60
Utilities 0.40
Fixed overhead costs per month are Supervision $4,000,
Depreciation $1,600
, and Property Taxes $800.
The company believes it will normally operate in a range of 6,200–11,600 direct labor hours per month. Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,800 direct labor hours. (List variable costs before fixed costs.)
Exercise 22-3 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 $1.20 0.60 0.40 Fixed overhead costs per month are Supervision $4,000 Depreciation $1 600 and Property Taxes S3 The company believes wil normally opera en a range of . 0 11,600 direct labor hours per month Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,800 direct labor hours. (List variable costs before fixed costs)Explanation / Answer
Activity level Direct labor hours 6200 8000 9800 11600 Variable costs: Indirect labor 7440 9600 11760 13920 Indirect materials 3720 4800 5880 6960 Utilities 2480 3200 3920 4640 Total variable cost 13640 17600 21560 25520 Fixed costs: Supervision 4000 4000 4000 4000 Depreciation 1600 1600 1600 1600 Property taxes 800 800 800 800 Total fixed costs 6400 6400 6400 6400 Total costs 20040 24000 27960 31920