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 130,000 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	$31,100

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
Budgeted direct labor hours		fill in the blank 980376ff5072fbd_1DLH
Variable costs:
Maintenance	$fill in the blank 980376ff5072fbd_2	$fill in the blank 980376ff5072fbd_3
Power	fill in the blank 980376ff5072fbd_4	fill in the blank 980376ff5072fbd_5
Indirect labor	fill in the blank 980376ff5072fbd_6	fill in the blank 980376ff5072fbd_7
Total variable costs			$fill in the blank 980376ff5072fbd_8
Fixed costs:
Maintenance		$fill in the blank 980376ff5072fbd_9
Indirect labor		fill in the blank 980376ff5072fbd_10
Rent		fill in the blank 980376ff5072fbd_11
Total fixed costs			fill in the blank 980376ff5072fbd_12
Total overhead costs			$fill in the blank 980376ff5072fbd_13

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
Budgeted direct labor hours		fill in the blank 57e64d04afd404d_1DLH
Variable costs:
Maintenance	$fill in the blank 57e64d04afd404d_2	$fill in the blank 57e64d04afd404d_3
Power	fill in the blank 57e64d04afd404d_4	fill in the blank 57e64d04afd404d_5
Indirect labor	fill in the blank 57e64d04afd404d_6	fill in the blank 57e64d04afd404d_7
Total variable costs			$fill in the blank 57e64d04afd404d_8
Fixed costs:
Maintenance		$fill in the blank 57e64d04afd404d_9
Indirect labor		fill in the blank 57e64d04afd404d_10
Rent		fill in the blank 57e64d04afd404d_11
Total fixed costs			fill in the blank 57e64d04afd404d_12
Total overhead costs			$fill in the blank 57e64d04afd404d_13

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
Budgeted direct labor hours		fill in the blank c2111c0c0fed055_1DLH
Variable costs:
Maintenance	$fill in the blank c2111c0c0fed055_2	$fill in the blank c2111c0c0fed055_3
Power	fill in the blank c2111c0c0fed055_4	fill in the blank c2111c0c0fed055_5
Indirect labor	fill in the blank c2111c0c0fed055_6	fill in the blank c2111c0c0fed055_7
Total variable costs			$fill in the blank c2111c0c0fed055_8
Fixed costs:
Maintenance		$fill in the blank c2111c0c0fed055_9
Indirect labor		fill in the blank c2111c0c0fed055_10
Rent		fill in the blank c2111c0c0fed055_11
Total fixed costs			fill in the blank c2111c0c0fed055_12
Total overhead costs			$fill in the blank c2111c0c0fed055_13