Myers company uses a flexible budget for manufactoring overhead based on direct
ID: 2581213 • Letter: M
Question
Myers company uses a flexible budget for manufactoring overhead based on direct labor hours.Variable manufactoring overhead costs per direct labor hour as follows.
Indirect labor $1.20
Indirect materials .70
Utilities .20
Fixed overhead costs per month are supervision $4300, Depreciation $2000, and property taxes $700. The company believes it will normally operate in a range of $8100 -12000 direct labor hours per month.
Prepare a monthly manufactoring overhead flexible budget for 2017 for the expected range of activity, using increments of 1300 direct labor hours
manufactoring overhead flexible budget for 2017
Activity level
Direct labor hours _______ ________ ________ ________
Variable costs
Indirect labor _______ ________ _______ _______
Indirect materials ________ ______ _____ ______
Utilities _____ ____ _____ _____
total variable costs _____ _____ _____ _____
Fixed costs
Depreciation _____ _____ _____ _____
Propety taxes _____ ______ ____ ______
Supervision ____ ____ ____ ____
Total fixed costs ____ ____ ____ ____
Total costs ___ _____ ____ ____
Explanation / Answer
Manufacturing overhead flexible budget for 2017 is
Costs for indirect labour : 1.2 * direct labour hours
Costs for indirect material : 0.7 * direct labour hours
costs for utilities : 0.2 * direct labour hours
Fixed costs will remain same as they do not vary with direct labour hours
Total cost = total variable cost + total fixed cost
Direct labour hours 8100 9400 10700 12000 Variable costs Indirect labour hour 9720 11280 12840 14400 Indirect materials 5670 6580 7490 8400 Utilities 1620 1880 2140 2400 Total variable costs 17010 19740 22470 25200 Fixed costs Depreciation 2000 2000 2000 2000 Property taxes 700 700 700 700 Supervision 4300 4300 4300 4300 Total fixed costs 7000 7000 7000 7000 Total costs 24010 26740 29470 32200Related Questions
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