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Question - Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour is as follows:
Indirect labour $0.50
Indirect materials 1.50
Maintenance .40
Utilities .20
Budgeted fixed overhead costs per month are:
Supervision $4,000
Insurance 2,000
Property taxes 1,000
Depreciation 9,000
The company believes it will normally operate in a range of 28,000 to 35,000 machine hours per month. During the month of August, 2020, the company incurred the following manufacturing overhead costs:
Indirect Labour $14,800
Indirect Materials 44,000
Maintenance 12,000
Utilities 6,500
Supervision 4,200
Insurance 2,100
Property Taxes 800
Depreciation 8,600
Required - Prepare in good form a flexible budget report, assuming that the company used 31,000 machine hours during August.
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