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 moth 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.
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