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 400,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.10 direct labor hour per unit, and the deluxe model 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	$68,500 + $2.30 DLH
Rent	$31,700

Required:

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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 06842e003fe1ffe_1DLH
Variable costs:
Maintenance	$fill in the blank 06842e003fe1ffe_2	$fill in the blank 06842e003fe1ffe_3
Power	fill in the blank 06842e003fe1ffe_4	fill in the blank 06842e003fe1ffe_5
Indirect labor	fill in the blank 06842e003fe1ffe_6	fill in the blank 06842e003fe1ffe_7
Total variable costs			$fill in the blank 06842e003fe1ffe_8
Fixed costs:
Maintenance		$fill in the blank 06842e003fe1ffe_9
Indirect labor		fill in the blank 06842e003fe1ffe_10
Rent		fill in the blank 06842e003fe1ffe_11
Total fixed costs			fill in the blank 06842e003fe1ffe_12
Total overhead costs			$fill in the blank 06842e003fe1ffe_13

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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 a8bd410be03c00b_1DLH
Variable costs:
Maintenance	$fill in the blank a8bd410be03c00b_2	$fill in the blank a8bd410be03c00b_3
Power	fill in the blank a8bd410be03c00b_4	fill in the blank a8bd410be03c00b_5
Indirect labor	fill in the blank a8bd410be03c00b_6	fill in the blank a8bd410be03c00b_7
Total variable costs			$fill in the blank a8bd410be03c00b_8
Fixed costs:
Maintenance		$fill in the blank a8bd410be03c00b_9
Indirect labor		fill in the blank a8bd410be03c00b_10
Rent		fill in the blank a8bd410be03c00b_11
Total fixed costs			fill in the blank a8bd410be03c00b_12
Total overhead costs			$fill in the blank a8bd410be03c00b_13

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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 575f4502306afa5_1DLH
Variable costs:
Maintenance	$fill in the blank 575f4502306afa5_2	$fill in the blank 575f4502306afa5_3
Power	fill in the blank 575f4502306afa5_4	fill in the blank 575f4502306afa5_5
Indirect labor	fill in the blank 575f4502306afa5_6	fill in the blank 575f4502306afa5_7
Total variable costs			$fill in the blank 575f4502306afa5_8
Fixed costs:
Maintenance		$fill in the blank 575f4502306afa5_9
Indirect labor		fill in the blank 575f4502306afa5_10
Rent		fill in the blank 575f4502306afa5_11
Total fixed costs			fill in the blank 575f4502306afa5_12
Total overhead costs			$fill in the blank 575f4502306afa5_13