Prepare a Flexible Budget:
The cost formulas for Swan Company's manufacturing overhead costs are given below. The costs cover a range of 8,000 to 10,000 machine-hours.
Overhead Costs Cost Formula
Supplies $0.20 per machine-hour
Indirect labor $10,000 plus $0.25 per machine-hour
Utilities $0.15 per machine-hour
Maintenance $7,000 plus $0.10 per machine-hour
Depreciation $8,000
Required: Prepare a flexible budget in increments of 1,000 machine-hours. Include all costs in your flexible budget.
Swan Company
Flexible Budget
Cost
Formula Machine-Hours
Overhead cost per MH 8,000 9,000 10,000
Variable:
Supplies
Indirect labor
Utilities
Maintenance
Total variable overhead cost
Fixed:
Indirect labor
Maintenance
Depreciation
Total fixed overhead cost
Total overhead cost