Lyman Inc. manufactures machine parts in its Blackwell plant. Lyman has devel- oped the following flexible budget for overhead for the coming year. Activity level is measured in direct labor hours.

Activity Level (hours)

Variable Cost Formula 20,000 30,000 40,000 Variable costs:

Maintenance $1.00 $ 20,000 $ 30,000 $ 40,000 Supplies 0.50 10,000 15,000 20,000 Power _0.10 2,000 3,000 4,000 Total variable costs $1.60 $ 32,000 $ 48,000. $ 64,000 Fixed costs: a Depreciation $ 7,200 $ 7,200 $ 7,200 Salaries 64,800 64,800 64,800 Total fixed costs $ 72,000 $ 72,000 $ 72,000 Total overhead costs $104,000 $120,000 $136,000 The Blackwell plant produces two different types of parts. The production bud- get for October is 48,000 units for part 301 and 18,000 units for part 414. Part 301 re- quires fifteen minutes of direct labor time, and Part 414 requires twenty minutes. Fixed overhead costs are incurred uniformly throughout the year.

Required:
Prepare an overhead budget for October. lp6