Q Caterpillar Company uses a flexible budget for manufacturing overhead based on
direct labor hours. Variable manufacturing overhead costs per direct labor hour are as
follows.
Fixed overhead costs per month are: Supervision $ Depreciation $ and
Property Taxes $ The company believes it will normally operate in a range of
direct labor hours per month.
Required
Prepare a monthly flexible manufacturing overhead budget for for the expected
range of activity, using increments of direct labor hours.
Assume that in May Caterpillar Company incurs the following manufacturing
overhead costs.
Prepare a flexible budget performance report, assuming that the company worked
direct labor hours during the month.
