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		$1.00
Indirect materials		0.50
Utilities		0.20

Fixed overhead costs per month are Supervision $3,500, Depreciation $1,000, and Property Taxes $500. The company believes it will normally operate in a range of 5,500–8,500 direct labor hours per month.

Prepare a monthly manufacturing overhead flexible budget for 2020 for the expected range of activity, using increments of 1,000 direct labor hours. (List variable costs before fixed costs.)

Answer 1

Answer :

Monthly manufacturing overhead budget

For the year 2020

Activity level	-	-	-	-
Direct labour hour	5500	6500	7500	8500
Variable overhead	-	-	-	-
Indirect labor	5500	6500	7500	8500
Indirect material	2750	3250	3750	4250
Utilities	1100	1300	1500	1700
Total variable cost	9350	11050	12750	14450
Fixed overhead	-	-	-	-
Supervision	3500	3500	3500	3500
Depreciation	1000	1000	1000	1000
Property taxes	500	500	500	500
Total fixed overhead	5000	5000	5000	5000
Total overhead	14350	16050	17750	19450