Preparing a direct labor budget and a flexible overhead budget. The Princeton Company manufactures a single product requiring 2 hour of labor for each unit of product. Direct labor costs are budgeted at $10 per hour. The budgeted output (normal capacity) for 19X4 is 60,000 units. Overhead cost data are as follows:

Instructions 1. Prepare the direct labor budget (Schedule E) for the year.
2. Prepare a yearly flexible overhead budget (Schedule F) at 90, 100, and 110 percent of capacity. The costs for depreciation and for taxes and insurance are noncontrollable.

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Indirect Labor Payroll Taxes and Fringe Benefits Indirect Materials Power Depreciation Taxes and Insurance Repairs Variable Cost Element per Direct Hour Fixed Cost Element per Year $36,000 $.80 1.16 7,500 .08 1,600 .16 3,600 10,000 3,500 .08 2,000