Bond Company uses the following figures to prepare its annual manufacturing overhead budget for 2014:
Variable overhead costs
-Indirect labor ($3.50 per direct labor hour)
-Indirect materials ($0.75 per direct labor hour)
-Factory supplies ($0.25 per direct labor hour)
Fixed overhead costs (for the relevant range)
-Depreciation per month.............................................30,000
-Supervision per month..............................................20,000
-Property taxes per month..........................................10,000
Total fixed overhead costs per month.............................60,000
The relevant range for monthly activity is expected to be between 16,000 and 24,000 direct labor hours.
Prepare a flexible budget for the monthly activity levels of 16,000 and 18,000 direct labor hours.