Fagan Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows:
IndirectLabor $5.00
IndirectMaterials 2.50
Maintenance .50
Utilities .30
Fixed Overhead costs per month are:
Supervision $600
Insurance 200
PropertyTaxes 300
Depreciation 900
The company believes it will normally operate in a range of 2,000 to 4,000 machine hours per month. During the month of August 2008 the company incurs the following manufacturing overhead costs:
IndirectLabor 14,000
IndirectMaterials 8,100
Maintenance 1,400
Utilities 950
Supervision 720
Insurance 200
PropertyTaxes 300
Depreciation 930
Prepare a flexible budget report, assuming that the company used 3,000 machine hours during August.