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Twyla: Prepare Flexible Manufacturing Overhead Budget based on direct labor hours
Twyla Company uses a flexible budget for manufacturing overhead based on direct labor hours. Variable manufacturing overhead cost per direct labor hour as follows.
Indirect Labor $1.00Indirect Material 0.60Utilities 0.40
Fixed overhead cost per month are: Supervision $4,000, Depreciation $1 500, and property taxes $800. The company believes it will normally operate in a range of 7,000-10,000 direct labor hours per month.
Instructions
Purpose a monthly flexible manufacturing overhead budget for 2005 for the expected range of activity, using increments of 1,000 direct labor hours.
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