MetaFlexible Budget for Various Levels of Activity

Cerium Inc. produces a variety of household cleaning products. Cerium's controller has developed standard costs for the following four overhead items:

Overhead Item Total Fixed Cost Variable Rate per Direct

Labor Hour

Maintenance $ $113,000$ $$0\mathrm{.}20$

Power $0\mathrm{.}68$

Indirect labor $140,0003\mathrm{.}70$

Rent $35,000$

Next year, Cerium expects production to require $58,000$ direct labor hours.Prepare an overhead budget for the expected level of direct labor hours for the coming year.

Cerium Inc.

Overhead Budget

For the Coming Year

Fixed costs:

Maintenance

Indirect labor

Rent

Total fixed costs

Total overhead costs

Prepare an overhead budget that reflects production that is $15\%$ higher than expected and for production that is $15\%$ lower than expected.

Activity

Level

Activity

Level

Rate per

Hour

Hours

Hours

Variable costs:

Maintenance

Power

Indirect labor

Total variable

costs

Fixed costs:

Maintenance

Indirect labor

Rent

Total fixed costs

Total overhead

costs