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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 $1.20
Indirect materials 0.80
Utilities 0.30

Fixed overhead costs per month are Supervision $3,700, Depreciation $1,900, and Property Taxes $600. The company believes it will normally operate in a range of 8,50014,200 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.

Variable Costs

Fixed Costs
Indirect labor $14,560 Supervision $3,700
Indirect materials 9,670 Depreciation 1,900
Utilities 3,220 Property taxes 600

(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.)

MYERS COMPANY Manufacturing Overhead Flexible Budget Report For the Month Ended July 31, 2017

Difference

Budget

Actual Costs

Favorable Unfavorable

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