Refer to the information provided in Problem 11-28.
In Problem 11-28. Nadia Tamimi, controller for First-Aid-Care Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of bandages for hospitals: (1) Young-Ones, designed for children, and (2) Surga-Aid, designed for use on larger injuries. The two lines of bandages use common raw materials in different proportions. The company expects to produce 80,000 cartons of each product during the coming year. Young-Ones requires 0.20 direct labour hours per carton, and Surga-Aid requires 0.30 direct labour hours per carton. Nadia has developed the following fixed and variable costs for each of the four overhead items:

Required:
1. Calculate the direct labour hours required for production that is 10 percent higher than expected. Calculate the direct labour hours required for production that is 20 percent lower than expected.
2. Prepare an overhead budget that reflects production that is 10 percent higher than expected, and for production that is 20 percent lower than expected.

Transcribed Image Text:

Variable Rate per Direct Labour Hour Overhead Item Fixed Cost Maintenance $57,250 S0.50 Power 0.40 2.10 Indirect labour Rent 43,500 39,000