Exercise 22-4 myers 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 $1.10 indirect materials 0.60 utilities 0.40 fixed overhead costs per month are supervision $3,900, depreciation $1,200, and property taxes $500. the company believes it will normally operate in a range of 7,400–11,300 direct labor hours per month. assume that in july 2017, myers company incurs the following manufacturing overhead costs. variable costs fixed costs indirect labor $10,730 supervision $3,900 indirect materials 5,840 depreciation 1,200 utilities 3,530 property taxes 500 (a) prepare a flexible budget performance report, assuming that the company worked 10,000 direct labor hours during the month. (list variable costs before fixed costs.)

In december of 2004, the company you own entered into a 20-year contract with a grain supplier for daily deliveries of grain to its hot dog bun manufacturing facility. the contract called for "10,000 pounds of grain" to be delivered to the facility at the price of $100,000 per day. until february 2017, the supplier provided processed grain which could easily be used in your manufacturing process. however, no longer wanting to absorb the cost of having the grain processed, the supplier began delivering whole grain. the supplier is arguing that the contract does not specify the type of grain that would be supplied and that it has not breached the contract. your company is arguing that the supplier has an onsite processing plant and processed grain was implicit to the terms of the contract. over the remaining term of the contract, reshipping and having the grain processed would cost your company approximately $10,000,000, opposed to a cost of around $1,000,000 to the supplier. after speaking with in-house counsel, it was estimated that litigation would cost the company several million dollars and last for years. weighing the costs of litigation, along with possible ambiguity in the contract, what are three options you could take to resolve the dispute? which would be the best option for your business and why?