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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		$1.30
Indirect materials		0.60
Utilities		0.30

Fixed overhead costs per month are Supervision $3,900, Depreciation $1,900, and Property Taxes $700. The company believes it will normally operate in a range of 6,300–11,700 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.)

MYERS COMPANY Monthly Manufacturing Overhead Flexible Budget For the Year 2017
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs		$		$		$		$
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs
Activity LevelDepreciationDirect Labor HoursFixed CostsIndirect LaborIndirect MaterialsProperty TaxesSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUtilitiesVariable Costs		$		$		$		$

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Answer 1

Solution:

Myers Company
Monthly Manufacturing Overhead Flexible Budget
For the year 2017
Direct Labor hours	6300	8100	9900	11700
Variable Costs:
Indirect labor	$8,190.00	$10,530.00	$12,870.00	$15,210.00
Indirect Materials	$3,780.00	$4,860.00	$5,940.00	$7,020.00
Utilities	$1,890.00	$2,430.00	$2,970.00	$3,510.00
Total Variable overhead cost	$13,860.00	$17,820.00	$21,780.00	$25,740.00
Fixed overhead costs:
Supervision	$3,900.00	$3,900.00	$3,900.00	$3,900.00
Depreciation	$1,900.00	$1,900.00	$1,900.00	$1,900.00
Property Taxes	$700.00	$700.00	$700.00	$700.00
Total Fixed overhead cost	$6,500.00	$6,500.00	$6,500.00	$6,500.00
Total Overhead Cost	$20,360.00	$24,320.00	$28,280.00	$32,240.00