Exercise 24-4 Myers Company uses a flexible budget for manufacturing overhead ba
ID: 2568123 • 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 $1.00 0.70 0.30 Fixed overhead costs per month are Supervision $ 4,100, Depreciation per month. 1,000, and Property Taxes $ 800. The company believes it will normally operate in a range of 7,200 13,200 direct labor hours Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs Variable Costs Fixed Costs Indirect labor Indirect materials Utilities $ 10,940 Supervision 7,640 Depreclation 2,950 Property taxes 4,100 1,000 800Explanation / Answer
Manufacturing Overhead Flexible Budget Report
Particulars
Budget
Actual Costs
Difference
Direct Labour Hours
11200
11200
Indirect Labour
11200
(11200*1)
10940
260
Favourable
Indirect Materials
7840
(11200*0.70)
7640
200
Favourable
Utilities
3360
(11200*0.30)
2950
410
Favourable
Total Variable Costs
22400
21530
870
Supervision
4100
4100
0
Neither Favourable nor Unfavourable
Depreciation
1000
1000
0
Neither Favourable nor Unfavourable
Property Taxes
800
800
0
Neither Favourable nor Unfavourable
Total Fixed Costs
5900
5900
0
Neither Favourable nor Unfavourable
Total Costs
28300
27430
870
Favourable
Manufacturing Overhead Flexible Budget Report
Particulars
Budget
Actual Costs
Difference
Direct Labour Hours
11200
11200
Indirect Labour
11200
(11200*1)
10940
260
Favourable
Indirect Materials
7840
(11200*0.70)
7640
200
Favourable
Utilities
3360
(11200*0.30)
2950
410
Favourable
Total Variable Costs
22400
21530
870
Supervision
4100
4100
0
Neither Favourable nor Unfavourable
Depreciation
1000
1000
0
Neither Favourable nor Unfavourable
Property Taxes
800
800
0
Neither Favourable nor Unfavourable
Total Fixed Costs
5900
5900
0
Neither Favourable nor Unfavourable
Total Costs
28300
27430
870
Favourable
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