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		0.70
Utilities		0.40

Fixed overhead costs per month are Supervision $4,200, Depreciation $1,500, and Property Taxes $800. The company believes it will normally operate in a range of 5,900–9,800 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,300 direct labor hours

Answer 1

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,300 direct labor hours

Direct labour hours	5900	7200	8500	9800
Variable manufacturing overhead
Indirect labor	7080	8640	10200	11760
Indirect material	4130	5040	5950	6860
Utilities	2360	2880	3400	3920
Total variable manufacturing overhead	13570	16560	19550	22540
Fixed manufacturing overhead
Supervision	4200	4200	4200	4200
Depreciation	1500	1500	1500	1500
Property tax	800	800	800	800
Total Fixed manufacturing overhead	6500	6500	6500	6500
Total manufacturing overhead	20070	23060	26050	29040