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 $0\mathrm{.}04$ direct labor hour per unit, and the household cleaner requires $0\mathrm{.}06.$ The controller has developed the following cost formulas for each of the four overhead items:

Cost Formula

Maintenance $$30,000+$ $$1\mathrm{.}25$ DLH

Power $$0\mathrm{.}50$ DLH

Indirect labor $$65,000+$ $$2\mathrm{.}30$ DLH

Rent $$28,000$

Required:

Question Content Area

$1.$ Prepare an overhead budget for the expected activity level for the coming year. Round your answers to the nearest cent, if required.

Engersol, Inc.

Overhead Budget

For the Year Ended December $31$

Per DLH blank

Budgeted direct labor hours blank fill in the blank eb$9$b$0$e$05$df$98$fe$0\_1$ blank

Variable costs:

Maintenance $fill in the blank eb$9$b$0$e$05$df$98$fe$0\_2$ $fill in the blank eb$9$b$0$e$05$df$98$fe$0\_3$

Power fill in the blank eb$9$b$0$e$05$df$98$fe$0\_4$ fill in the blank eb$9$b$0$e$05$df$98$fe$0\_5$

Indirect labor fill in the blank eb$9$b$0$e$05$df$98$fe$0\_6$ fill in the blank eb$9$b$0$e$05$df$98$fe$0\_7$

Total variable costs $fill in the blank eb$9$b$0$e$05$df$98$fe$0\_8$

Fixed costs:

Maintenance $fill in the blank eb$9$b$0$e$05$df$98$fe$0\_9$

Indirect labor fill in the blank eb$9$b$0$e$05$df$98$fe$0\_10$

Rent fill in the blank eb$9$b$0$e$05$df$98$fe$0\_11$

Total fixed costs fill in the blank eb$9$b$0$e$05$df$98$fe$0\_12$

Total overhead costs $fill in the blank eb$9$b$0$e$05$df$98$fe$0\_13$

Question Content Area

$2.$ Prepare an overhead budget that reflects production that is $10$ percent higher than expected $($for both products$).$ Round your answers to the nearest cent, if required.

Engersol, Inc.

Overhead Budget

For the Year Ended December $31$

Per DLH blank blank

Budgeted direct labor hours blank fill in the blank e$84$eeafcffc$1064\_1$ blank

Variable costs:

Maintenance $fill in the blank e$84$eeafcffc$1064\_2$ $fill in the blank e$84$eeafcffc$1064\_3$

Power fill in the blank e$84$eeafcffc$1064\_4$ fill in the blank e$84$eeafcffc$1064\_5$

Indirect labor fill in the blank e$84$eeafcffc$1064\_6$ fill in the blank e$84$eeafcffc$1064\_7$

Total variable costs $fill in the blank e$84$eeafcffc$1064\_8$

Fixed costs:

Maintenance $fill in the blank e$84$eeafcffc$1064\_9$

Indirect labor fill in the blank e$84$eeafcffc$1064\_10$

Rent fill in the blank e$84$eeafcffc$1064\_11$

Total fixed costs fill in the blank e$84$eeafcffc$1064\_12$

Total overhead costs $fill in the blank e$84$eeafcffc$1064\_13$

Question Content Area

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 blank blank

Budgeted direct labor hours blank fill in the blank efa$58$bfd$803104$b$\_1$ blank

Variable costs:

Maintenance $fill in the blank efa$58$bfd$803104$b$\_2$ $fill in the blank efa$58$bfd$803104$b$\_3$

Power fill in the blank efa$58$bfd$803104$b$\_4$ fill in the blank efa$58$bfd$803104$b$\_5$

Indirect labor fill in the blank efa$58$bfd$803104$b$\_6$ fill in the blank efa$58$bfd$803104$b$\_7$

Total variable costs $fill in the blank efa$58$bfd$803104$b$\_8$

Fixed costs:

Maintenance $fill in the blank efa$58$bfd$803104$b$\_9$

Indirect labor fill in the blank efa$58$bfd$803104$b$\_10$

Rent fill in the blank efa$58$bfd$803104$b$\_11$

Total fixed costs fill in the blank efa$58$bfd$803104$b$\_12$

Total overhead costs $fill in the blank efa$58$bfd$803104$b$\_13$

Question Content Area

$3.$ Which of the four data analytic types$$descriptive$,$ diagnostic, predictive, or prescriptive$$is being used in creating the three flexible budgets? $($See Exhibits $2\mathrm{.}5$ and $2\mathrm{.}6,$ pp$.37,40,$ for a review of data analytic types.$)$

The flexible budgets are used

to determine how well the company will do under various sales scenarios.

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