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 0.30 Fixed overhead costs per month are Supervision $4,400, Depreciation $1,100, and Property Taxes $900. The company believes it will normally operate in a range of 7,500–10,500 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

Answer 1

MYERS COMPANY
Monthly Manufacturing Overhead Flexible Budget
For the Year 2020
Activity level
Direct labor hours	7,500.00	8,500.00	9,500.00	10,500.00
Variable costs:
Indirect labor ($1.00)	7,500.00	8,500.00	9,500.00	10,500.00
Indirect materials ($0.50)	3,750.00	4,250.00	4,750.00	5,250.00
Utilities ($0.30)	2,250.00	2,550.00	2,850.00	3,150.00
Total variable cost	13,500.00	15,300.00	17,100.00	18,900.00
Fixed costs
Supervision	4,400.00	4,400.00	4,400.00	4,400.00
Depreciation	1,100.00	1,100.00	1,100.00	1,100.00
Property taxes	900.00	900.00	900.00	900.00
Total fixed costs	6,400.00	6,400.00	6,400.00	6,400.00
Total costs	19,900.00	21,700.00	23,500.00	25,300.00