Preparing a direct labor budget and a flexible overhead budget.

The James Corporation manufactures a single product requiring 2 hours of labor for each unit of product. Direct labor costs are budgeted at $8 per hour. The budgeted output (normal capacity) for 19X1 is 20,000 units. Overhead cost data are shown on page 436.

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 $48,000 $1.10 1.82 9,600 .20 1,000 .10 3,000 12,000 - 6,420 .06 3,850