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 |
|
$1.30 |
| Indirect materials |
|
0.80 |
| Utilities |
|
0.30 |
Fixed overhead costs per month are: Supervision $3,768, Depreciation $1,594, and Property Taxes $840. The company believes it will normally operate in a range of 6,300-12,000 direct labor hours per month.
Assume that in July 2014, Thome Company incurs the following manufacturing overhead costs.
|
Variable Costs
|
|
Fixed Costs
|
| Indirect labor |
|
$12,892 |
|
Supervision |
|
$3,768 |
| Indirect materials |
|
7,923 |
|
Depreciation |
|
1,594 |
| Utilities |
|
2,557 |
|
Property taxes |
|
840 |