Thome company uses a flexible budget for manufacturing

Reference no: EM13589152

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, and Property Taxes $800. The company believes it will normally operate in a range of 7,000-10,000 direct labor hours per month.

Assume that 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

Comment on the findings of manufacturing overhead flexible budget report using the two different direct labor hours presented in Exercise 10-4.

Reference no: EM13589152

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