Data concerning manufacturing overhead for Wilson Industries are presented below.

The Mixing Department is a cost center.

An analysis of the overhead costs reveals that all variable costs are controllable by the

manager of the Mixing Department and that $50\%$ of supervisory costs are controllable at

the department level.

The flexible budget formula and thre cost and activity for the months of July and August

are as follows:

Flexible Budget Per Actual

Direct Labor Hour July August

Direct labor hours $6,0007,000$

Overhead costs

Variable

Cody Co$.$ developed its annual manufacturing overhead budget for its master budget

for $2016$ as follows:

Expected annual operating capacity: $120,000$ direct labor hours

Variable overhead costs

Indirect labor $600,000$

Indirect materials $120,000$

Factory supplies $60,000$

Total variable costs $780,000$

Fixed overhead costs

Depreciation $240,000$

Supervision $120,000$

Property taxes $96,000$

Total fixed costs $456,000$

Total costs $1,236,000$

The relevant range for monthly activity is expected to be between

$8,000$ and $12,000$ direct labor hours.

INSTRUCTIONS

Prepare a flexible budget for a monthly activity level of $8,000$ and $9,000$

direct labor hours.