Martinez Company uses a flexible budget for manufacturing overhead based on direct labor hours. Budgeted...
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Martinez Company uses a flexible budget for manufacturing overhead based on direct labor hours. Budgeted variable manufacturing overhead costs per direct labor hour are as follows.
Indirect labor
$ 1.00
Indirect materials
0.70
Utilities
0.40
Budgeted fixed overhead costs per month are Supervision $ 3,840, Depreciation $ 1,152, and property Taxes $ 768. The company believes it will normally operate in a range of 6,720 9,600 direct labor hours per month. Assume that in July 2022, Martinez Company incurs the following manufacturing overhead costs.
Variable Costs
Fixed Costs
Indirect labor
$ 8,448
Supervision
$ 3,840
Indirect materials
5,568
Depreciation
1,152
Utilities
3,072
Property taxes
768
(a) Prepare a flexible budget performance report, assuming that the company worked 8,640 direct labor hours during the month. (List variable costs before fixed costs.)
(b) Prepare a flexible budget performance report, assuming that the company worked 8,160 direct labor hours during the month. (List variable costs before fixed costs.)
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