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Myers Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable...

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Accounting

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 $ 1.00
Indirect materials 0.70
Utilities 0.40

Fixed overhead costs per month are Supervision $ 4,200 , Depreciation $ 1,800 , and Property Taxes $ 600 . The company believes it will normally operate in a range of 7,000 13,000 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.

Variable Costs

Fixed Costs
Indirect labor $ 10,760 Supervision $ 4,200
Indirect materials 7,520 Depreciation 1,800
Utilities 3,950 Property taxes 600

(a) Prepare a flexible budget performance report, assuming that the company worked 11,000 direct labor hours during the month.

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Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs

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