Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable...
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Accounting
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
0.70
Utilities
0.40
Fixed overhead costs per month are Supervision $ 4,200 , Depreciation $ 1,800 , and Property Taxes $ 600 . The company believes it will normally operate in a range of 7,000 13,000 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.
Variable Costs
Fixed Costs
Indirect labor
$ 10,760
Supervision
$ 4,200
Indirect materials
7,520
Depreciation
1,800
Utilities
3,950
Property taxes
600
(a) Prepare a flexible budget performance report, assuming that the company worked 11,000 direct labor hours during the month.
Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs
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