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		$1.10
Indirect materials		0.70
Utilities		0.40

Fixed overhead costs per month are Supervision $3,600, Depreciation $1,800, and Property Taxes $800. The company believes it will normally operate in a range of 7,700–11,000 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2017 for the expected range of activity, using increments of 1,100 direct labor hours. (List variable costs before fixed costs.)

Answer 1