Flexible Budget In an attempt to improve budgeting, the controller for Engersol, Inc., has developed a flexible budget for overhead costs. Engersol, Inc., makes two types of products, commercial floor cleaners and household floor cleaners. The company expects to produce 300,000 units of the commercial cleaner and 140,000 units of the household cleaner during the coming year. The commercial cleaner requires 0.10 direct labor hour per unit, and the household cleaner requires 0.16. The controller has developed the following cost formulas for each of the four overhead items: Cost Formula Maintenance $34,600 +$1.25 DLH Power $0.50 DLH Indirect labor $68,200+ $2.30 DLH Rent $31,100 1. Prepare an overhead budget for the expected activity level for the coming year. Engersol, Inc. Overhead Budget For the Year Ended December 31 Per DLH Budgeted direct labor hours 52,400 Variable costs: Maintenance 1.25 $ 65,500 Power 0.5 26,200 Indirect labor 2.3 120,520 Total variable costs 212,220 Fixed costs: Maintenance 34,600 Indirect labor 68,200 Rent 31,100 Total fixed costs 133,900 Total overhead costs 346,120 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products). Engersol, Inc. Overhead Budget For the Year Ended December 31 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 Per DLH Prepare an overhead budget for production that is 20 percent lower than expected. Engersol, Inc. Overhead Budget For the Year Ended December 31 Budgeted direct labor hours Variable costs: Maintenance Power Indirect labor Per DLH Total variable costs $ Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs