Question

The following budget information relates to Mercedes Benz Corporation.

     Variable manufacturing overhead costs per machine hour are as follows:

    

       Indirect Labor           $7.30

       Indirect Materials        3.55

       Maintenance                .97

       Utilities                  .53

    

     Fixed overhead costs per month are:

       Supervision               $900

       Insurance                  500

       Property Taxes             600

       Depreciation               300

    

     The normal operating range is 4,000 to 8000 machine hours per month.

   

     INSTRUCTIONS

     Mercedes-Benz would like a flexible manufacturing overhead budget prepared

    based on machine hours. Given the range of activity above, prepare the

     budget using increments of 2,000 machine hours.

Answer 1

			Flexible Budget
Machine hours				4,000	6,000	8,000
Variable expense
Indirect labor				29200	43800	58400
indirect materials				14200	21300	28400
maintenance				3880	5820	7760
utilities				2120	3180	4240
total varianble expense				49400	74100	98800
fixed expense
supervision				900	900	900
insurance				500	500	500
property taxes				600	600	600
Depreciation				300	300	300
total fixed expense				2300	2300	2300
total cost				51700	76400	101100