ACC 560 MART Education Terms/acc560mart.com ACC 560 MART Education Terms/acc560mart.com | Page 39

Indirect labor
$1.00
Indirect materials
0.70
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.
Instructions
Prepare a monthly manufacturing overhead flexible budget for 2017
for the expected range of activity, using increments of 1,000 direct
labor hours.
Prepare flexible budget reports for manufacturing overhead costs, and
comment on findings.
E10-5
Fallon Company uses flexible budgets to control its selling expenses.
Monthly sales are expected to range from $170,000 to $200,000.
Variable costs and their percentage relationship to sales are sales
commissions 6%, advertising 4%, traveling 3%, and delivery 2%. Fixed
selling expenses will consist of sales salaries $35,000, depreciation on
delivery equipment $7,000, and insurance on delivery equipment
$1,000.
Instructions