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 120,000 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: Maintenance Power. Indirect labor Rent Cost Formula $34,600+ $1.25 DLH $0.50 DLH $68,200+ $2.30 DLH $31,700 Required: 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 54,120 X Variable costs: Maintenance 1.25 67,650 X Power 0.5 27,060 X Indirect labor 2.3 124,476 X Total variable costs 219,186 X Fixed costs: Maintenance Indirect labor Rent 34.600 68,200 31,700 Total fixed costs 134,500 Total overhead costs 353,686 X 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 39,360 X 1.25 49,200 X 0.5 19,680 X 2.3 90,528 X 159,408 X 34,600 68,200 31,700 134,500 293,908 X Prepare an overhead budget for production that is 20 percent lower than expected. Engersol, Inc. Overhead Budget For the Year Ended December 31 Per 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 49,200 X 1.25 61,500 X 0.5 24,600 X 2.3 113,160 X 199,260 X 34,600 68,200 31,700 134,500 333,760 X