Palladium Inc. produces a variety of household cleaning products. Palladium's controller has developed standard costs for the following four overhead items: Overhead Total Fixed Cost Variable Rate per Item Direct Labor Hour Maintenance $86,000 $0.20 Power 0.45 Indirect labor 140,000 2.10 Rent 35,000 Next year, Palladium expects production to require 90,000 direct labor hours. Required:

1. Prepare an overhead budget for the expected level of direct labor hours for the coming year.

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