Flexible Budget for Various Levels of Activity

Hajiey Inc. produces a variety of toothpastes. Hajiey's controller has developed standard costs for the following four overhead items:

Overhead Item Total Fixed Cost Variable Rate per Direct

Labour Hour

Maintenance $$96,000$ $$0\mathrm{.}20$

Power $0\mathrm{.}45$

Indirect labour $140,0002\mathrm{.}10$

Rent $43,000$

Next year, Hajiey expects production to require $110,000$ direct labour hours.

Required:

Question Content Area

$1.$ Prepare an overhead budget for the expected level of direct labour hours for the coming year.

Hajiey Inc.

Overhead Budget

For the Coming Year

Formula Activity Level $110,000$ Hours

Variable costs:

Maintenance $$0\mathrm{.}20$ $fill in the blank ac$62$ef$084032$fa$9\_1$

$22,000$

Power $0\mathrm{.}45$ fill in the blank ac$62$ef$084032$fa$9\_2$

$49,500$

Indirect labour $2\mathrm{.}10$ fill in the blank ac$62$ef$084032$fa$9\_3$

$231,000$

Total variable costs $fill in the blank ac$62$ef$084032$fa$9\_4$

$302,500$

Fixed costs:

Maintenance $fill in the blank ac$62$ef$084032$fa$9\_5$

$96,000$

Indirect labour fill in the blank ac$62$ef$084032$fa$9\_6$

$140,000$

Rent fill in the blank ac$62$ef$084032$fa$9\_7$

$43,000$

Total fixed costs $fill in the blank ac$62$ef$084032$fa$9\_8$

$279,000$

Total overhead costs $fill in the blank ac$62$ef$084032$fa$9\_9$

$581,500$

Feedback Area

Feedback

$1.$ Prepare budget with company name, budget title and period covered. Use the information for variable costs and total, and then do the same for fixed costs and total.

Question Content Area

$2.$ Prepare an overhead budget that reflects production that is $15\%$ higher than expected, and for production that is $15\%$ lower than expected.

Hajiey Inc.

Overhead Budget

For the Coming Year

Formula Activity Level

at $15\%$ higher

Activity Level

at $15\%$ lower

Variable costs:

Maintenance $$0\mathrm{.}20$ $fill in the blank $14$df$47$fedfb$8005\_1$

$25,300$

$fill in the blank $14$df$47$fedfb$8005\_2$

$18,700$

Power $0\mathrm{.}45$ fill in the blank $14$df$47$fedfb$8005\_3$

$56,925$

fill in the blank $14$df$47$fedfb$8005\_4$

$42,075$

Indirect labour $2\mathrm{.}10$ fill in the blank $14$df$47$fedfb$8005\_5$

$265,650$

fill in the blank $14$df$47$fedfb$8005\_6$

$196,350$

Total variable costs $fill in the blank $14$df$47$fedfb$8005\_7$

$347,875$

$fill in the blank $14$df$47$fedfb$8005\_8$

$257,125$

Fixed costs:

Maintenance $fill in the blank $14$df$47$fedfb$8005\_9$

$110,400$

$fill in the blank $14$df$47$fedfb$8005\_10$

$81,600$

Indirect labour fill in the blank $14$df$47$fedfb$8005\_11$

$161,000$

fill in the blank $14$df$47$fedfb$8005\_12$

Rent fill in the blank $14$df$47$fedfb$8005\_13$

fill in the blank $14$df$47$fedfb$8005\_14$

Total fixed costs $fill in the blank $14$df$47$fedfb$8005\_15$

$fill in the blank $14$df$47$fedfb$8005\_16$

Total overhead costs $fill in the blank $14$df$47$fedfb$8005\_17$

$fill in the blank $14$df$47$fedfb$8005\_18$ Flexible Budget for Various Levels of Activity

Hajiey Inc. produces a variety of toothpastes. Hajiey's controller has developed standard costs for the following four overhead items:

Next year, Hajiey expects production to require $110,000$ direct labour hours. Required:

Prepare an overhead budget for the expected level of direct labour hours for the coming year.

Hajiey Inc.

Overhead Budget

For the Coming YearPrepare an overhead budget that reflects production that is $15\%$ higher than expected, and for production that is $15\%$ lower

than expected.

Hajiey Inc.

Overhead Budget

For the Coming Year

Activity Level Activity Level

Formula at $15\%$ higher at $15\%$ lower