Exercise 24-4 Myers Company uses a flexible budget for manufacturing overhead ba
ID: 2406090 • Letter: E
Question
Exercise 24-4 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 Indirect materials Utilities 1.20 0.60 0.30 Fixed overhead costs per month are Supervision $ 3,600, Depreciation $ 1,200, and Property Taxes $ 800. The company believes it will normally operate in a range of 8,500- 14,200 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor Indirect materials Utilities 14,510 Supervision 7,180 Depreciation 3,260 Property taxes 3,600 1,200 800 (a) Prepare a flexible budget performance report, assuming that the company worked 12,300 direct labor hours during the month. (List variable costs before fixed costs.) HYERS COMPANY Manufactuing Overhead Flexable Budget Report For the Month Ended July 31, 2017 Differenoe Favorable Unfavorable Neither FavorableExplanation / Answer
MYERS COMPANY
Manufacturing Overhead Flexible Budget
For the month ended July 31, 2017.
Favorable
Unfavourable
Neither favorable nor unfavourable
14760
(12300*1.20)
250 favorable
(14510-14760)
7380
(12300*0.60)
200 Favorable
(7180-7380)
3690
(12300*0.30)
430 Favorable
(3260-3690)
880 Favorable
(24950-25830)
0
neither favorable nor unfavourable
0
Neither favorable nor unfavourable
0
Neither unfavourable nor unfavourable
0
Neither favourable nor unfavourable
880 Favorable
(30550-31430)
Difference Budget actual costsFavorable
Unfavourable
Neither favorable nor unfavourable
Direct labor hours 12300 12300 Variable costs Indirect labor14760
(12300*1.20)
14510250 favorable
(14510-14760)
Indirect materials7380
(12300*0.60)
7180200 Favorable
(7180-7380)
Utilities3690
(12300*0.30)
3260430 Favorable
(3260-3690)
Total variable costs 25830 24950880 Favorable
(24950-25830)
Fixed costs Supervision 3600 36000
neither favorable nor unfavourable
Depreciation 1200 12000
Neither favorable nor unfavourable
Property taxes 800 8000
Neither unfavourable nor unfavourable
Total fixed costs 5600 56000
Neither favourable nor unfavourable
Total costs 31430 30550880 Favorable
(30550-31430)
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