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 $1.40
Indirect materials 0.80
Utilities 0.40
Fixed overhead costs per month are: Supervision $3,686, Depreciation $1,324, and Property Taxes $696. The company believes it will normally operate in a range of 8,100-12,600 direct labor hours per month.
Assume that in July 2014, Thome Company incurs the following manufacturing overhead costs.
| Variable Costs |
|
Fixed Costs |
| Indirect labor |
|
$15,282 |
|
Supervision |
|
$3,686 |
| Indirect materials |
|
8,683 |
|
Depreciation |
|
1,324 |
| Utilities |
|
3,985 |
|
Property taxes |
|
696 |
(a) Prepare a flexible budget performance report, assuming that the company worked 11,100 direct labor hours during the month. (List variable costs before fixed costs.)
(b) Prepare a flexible budget performance report, assuming that the company worked 10,600 direct labor hours during the month.