Webb, uses a flexible budget for manufacturing overhead based on machine hours.

Question

Webb, uses a flexible budget for manufacturing overhead based on machine hours. Varlable manufacturing overhead costs per machine hour are as folows Indirect labor Indirect materials 50 50 0.30 Utiities Ficed overhead costs per month are $1.200 Insurance $600 eciation 1,800 The company believes t vwill normaly operate in a range of 4,000 to 8,000 machine hours per month During the month of August 2013, the company inours the folowing manufacturing overhead 28000 16.200 800 1900 ect labor materials Insurance 400 taxes Depreciation 1,860 Instructions Prepare a exible budget report, assoming that he company used 6,000 machine hours during Augs

Explanation / Answer

Flexible Budget (fr 6000 MH) Standard Actual Spending Variance Variable cost Indirect labor 30000 28000 2000 F Indirect material 15000 16200 1200 U Maintenance cost 3000 2800 200 F Utilities cost 1800 1900 100 U Total Variable cost 49800 48900 900 F Fixed cost: Supervision 1200 1440 240 U Insurance 400 400 0 property tax 600 600 0 Depreciation 1800 1860 60 U Total fixed cost 4000 4300 300 U Total cost 53800 53200 600 F

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