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

Question

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

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 Indirect materials Utilities 1.10 0.90 0.40 Fixed overhead costs per month are Supervision $ 4,200, Depreciation $ 1,900, and Property Taxes $ 900. The company believes it will normally operate in a range of 7,000 12,100 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor Indirect materials Utilities 4,200 1,900 900 s 11,210 Supervision 9,220 Depreciation 3,740 Property taxes (a) Prepare a flexible budget performance report, assuming that the company worked 10,400 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 Favorable Unfavorable Neither Favorable nor Unfavorable Bud Actual Costs(b) Prepare a flexible budget performance report, assuming that the company worked 9,800 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 Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs

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 Indirect materials Utilities 1.10 0.90 0.40 Fixed overhead costs per month are Supervision $ 4,200, Depreciation $ 1,900, and Property Taxes $ 900. The company believes it will normally operate in a range of 7,000 12,100 direct labor hours per month. Assume that in July 2017, Myers Company incurs the following manufacturing overhead costs. Variable Costs Fixed Costs Indirect labor Indirect materials Utilities 4,200 1,900 900 s 11,210 Supervision 9,220 Depreciation 3,740 Property taxes (a) Prepare a flexible budget performance report, assuming that the company worked 10,400 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 Favorable Unfavorable Neither Favorable nor Unfavorable Bud Actual Costs
(b) Prepare a flexible budget performance report, assuming that the company worked 9,800 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 Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs

Answers

Part A

MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
Difference
Favorable
Unfavorable
Budget Actual Costs Neither Favorable nor Unfavorable
Direct Labor Hours 10400 10400
Variable Costs
Indirect Labor $                               11,440 $       11,210 $                                                         230.00 Favorable
Indirect Materials $                                  9,360 $          9,220 $                                                         140.00 Favorable
Utilities $                                  4,160 $          3,740 $                                                         420.00 Favorable
Total Variable Costs $                               24,960 $       24,170 $                                                         790.00 Favorable
Fixed Costs
Supervision $                                  4,200 $          4,200 $                                                                  -   Neither
Depreciation $                                  1,900 $          1,900 $                                                                  -   Neither
Property Taxes $                                     900 $             900 $                                                                  -   Neither
Total Fixed Costs $                                  7,000 $          7,000 $                                                                  -   Neither
Total Costs $                               31,960 $       31,170 $                                                         790.00 Favorable

NOTES:

Budgeted Costs
Units Costs Unit * cost
Indirect Labor 10400 $       1.10 $   11,440.00
Indirect Materials 10400 $       0.90 $      9,360.00
Utilities 10400 $       0.40 $      4,160.00

Ques b

MYERS COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2017
Difference
Favorable
Unfavorable
Budget Actual Costs Neither Favorable nor Unfavorable
Direct Labor Hours 9800 9800
Variable Costs
Indirect Labor $                               10,780 $       11,210 $                                                      (430.00) Unfavorable
Indirect Materials $                                  8,820 $          9,220 $                                                      (400.00) Unfavorable
Utilities $                                  3,920 $          3,740 $                                                         180.00 Favorable
Total Variable Costs $                               23,520 $       24,170 $                                                      (650.00) Unfavorable
Fixed Costs
Supervision $                                  4,200 $          4,200 $                                                                  -   Neither
Depreciation $                                  1,900 $          1,900 $                                                                  -   Neither
Property Taxes $                                     900 $             900 $                                                                  -   Neither
Total Fixed Costs $                                  7,000 $          7,000 $                                                                  -   Neither
Total Costs $                               30,520 $       31,170 $                                                      (650.00) Unfavorable

Notes

Budgeted Costs
Units Costs Unit * cost
Direct Labor Hours 9800 $       1.10 $   10,780.00
Variable Costs 9800 $       0.90 $      8,820.00
Indirect Labor 9800 $       0.40 $      3,920.00


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