Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 110,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items: Cost Formula Maintenance $34,300 + $1.25 DLH Power $0.50 DLH Indirect labor $68,500 + $2.30 DLH Rent $31,700 Required: 1. Prepare an overhead budget for the expected activity level for the coming year Required: 1. Prepare an overhead budget for the expected activity level for the coming year. Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH DLH Budgeted direct labor hours Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products). Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH DLH Budgeted direct labor hours Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor 3 Rent Total fixed costs Total overhead costs Prepare an overhead budget for production that is 20 percent lower than expected. Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH DLH Budgeted direct labor hours Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs Flexible Budget In an attempt to improve budgeting, the controller for Meliore, Inc., has developed a flexible budget for overhead costs. Meliore, Inc., makes two types of products, the standard model and the deluxe model. Meliore expects to produce 300,000 units of the standard model and 110,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items: Cost Formula Maintenance $34,300 + $1.25 DLH Power $0.50 DLH Indirect labor $68,500 + $2.30 DLH Rent $31,700 Required: 1. Prepare an overhead budget for the expected activity level for the coming year Required: 1. Prepare an overhead budget for the expected activity level for the coming year. Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH DLH Budgeted direct labor hours Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products). Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH DLH Budgeted direct labor hours Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor 3 Rent Total fixed costs Total overhead costs Prepare an overhead budget for production that is 20 percent lower than expected. Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH DLH Budgeted direct labor hours Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs
