Company uses a flexible budget for manufacturing overhead based on machine hours
ID: 2371924 • Letter: C
Question
Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows:
Indirect labor $5.00
Indirect materials 2.50
Maintenance 1.50
Utilities .30
Fixed overhead costs per month are:
Supervision $800
Insurance 200
Property taxes 300
Depreciation 900
The company believes it will normally operate in a range of 2,000 to 4,000 machine hours per month. During the month of August, 2010, the company incurs the following manufacturing overhead costs:
Indirect labor $14,000
Indirect materials 8,100
Maintenance 4,400
Utilities 950
Supervision 720
Insurance 200
Property taxes 300
Depreciation 930
Instructions
Prepare a flexible budget report, assuming that the company used 3,000 machine hours during August.
Explanation / Answer
Manufacturing overhead flexible budget for 2008 Direct labor hours 7,000 8,000 9,000 10,000Variable CostsIndirect labor $7,000 $8,000 $9,000 $10,000Indirect Materials $3,500 $4,000 $4,500 $5,000Utilities $2,800 $3,200 $3,600 $4,000Total VC $13,300 $15,200 $17,100 $19,000Fixed CostsSupervision $48,000 $48,000 $48,000 $48,000D
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