Raney 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 |
0.50 |
|
Utilities |
0.40 |
|
Fixed overhead costs per moth are: |
|
|
Supervision |
4,000 |
|
Depreciation |
1,500 |
|
Property taxes |
800 |
The company believes it will normally operate in a range of 7,000 to 10,000 direct labor hours per month.
Instructions:
Prepare a monthly flexible manufacturing overhead budget for 2010 for the expected range of activity, using increments of 1,000 direct labor hours.