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 month 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.