(Mixed costs and predetermined overhead rates; raw bases, flexible budget) Les Is Best manufactures fiberglass swimming pools in a two-department process: Produc¬ tion and Installation. Production is highly automated and machine hours are used as the basis for allocating departmental overhead. Installation is labor in¬ tensive and uses direct labor hours to apply overhead. Following is cost infor¬ mation at various activity levels for each department:

Each pool is estimated to require 500 machine hours in Production and 250 hours of direct labor in Installation. Next month, the company plans to produce and install 11 pools, which is 1 pool beyond the company’s expected capacity.

a. Compute the variable and fixed values in the formula y = a 4- bX for each department.

b. Prepare a flexible budget for next month’s variable, fixed, and total overhead costs for each department assuming production is 9, 10, 11, or 12 pools.

c. Calculate the predetermined total overhead cost to be applied to each pool scheduled for production in the coming month if expected annual capacity is used to calculate the predetermined overhead rates.LO1

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MACHINE HOURS (MHS) 3,000 4,000 5,000 6,000 PRODUCTION OVERHEAD COSTS: Variable Fixed Total $12,150 7,950 $20,100 $16,200 $20,250 $24,300 7,950 $24,150 7,950 $28,200 7,950 $32,250