Prepare a flexible budget performance report

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Reference no: EM131921563

Problem

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 0.90
Utilities 0.40

Fixed overhead costs per month are Supervision $ 3,700 , Depreciation $ 1,700 , and Property Taxes $ 800 . The company believes it will normally operate in a range of 5,700 - 9,300 direct labor hours per month.

Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs.

Variable Costs		Fixed Costs
Indirect labor	$ 7,870	Supervision	$ 3,700
Indirect materials	7,120	Depreciation	1,700
Utilities	2,780	Property taxes	800

(a) Prepare a flexible budget performance report, assuming that the company worked 8,100 direct labor hours during the month.
(b) Prepare a flexible budget performance report, assuming that the company worked 7,300 direct labor hours during the month.

Reference no: EM131921563

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