Thome
Company uses a flexible budget for manufacturing overhead based on direct labor
hours. Variable manufacturing overhead costs per direct labor hour are as
follows
E10-4 Thome
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
|
0.60
|
|
Utilities
|
0.40
|
|
Fixed overhead costs per month are:
|
Supervision
|
$4,000
|
|
Depreciation
|
1,200
|
|
|
Property Taxes
|
800
|
In July
2014, Thome Company incurs the following manufacturing overhead costs:
|
Variable Costs:
|
Fixed Costs:
|
|||
|
Indirect labor
|
$8,800
|
Supervision
|
$4,000
|
|
|
Indirect materials
|
5,300
|
Depreciation
|
1,200
|
|
|
Utilities
|
3,200
|
Property Taxes
|
800
|
|
Instructions:
(a) Prepare a
flexible budget performance report, assuming that the company worked9,000 direct
labor hours during the month.
(b) Prepare a
flexible budget performance report, assuming that the company worked 8,500 direct
labor hours during the month.
(c) Comment
on your findings
SOLUTION PREVIEW
(a) Prepare a
flexible budget performance report, assuming that the company worked9,000 direct
labor hours during the month.
THOME COMPANY
Manufacturing Overhead Flexible Budget Report
For the Month Ended July 31, 2014
|
Direct labor hours (DLH)
|
Budget:
|
Actual Costs
|
Favorable - Fav
|
||
|
Variable costs
|
9,000 DLH
|
9,000 DLH
|
Unfavorable - Unf
|
||
|
Indirect labor
|
$9,000
|
$8,800
|
$200
|
Fav
|
|
|
Indirect materials
|
5,400
|
$5,300
|
$100
|
Fav
|
|
|
Utilities
|
3,600
|
$3,200
|
$400
|
Fav
|
|
File name: E10-4 Thome Company.xls File type: xls-template PRICE:
$7
