Exercise 8.27 Flexible Budget In an attempt to improve budgeting, the controller
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Question
Exercise 8.27
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 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items:
Required:
1. Prepare an overhead budget for the expected activity level for the coming year. Round your answers to the nearest cent, if required.
Meliore, Inc.
Overhead Budget
For the Year Ended December 31
Per DLH
Variable Cost
Variable costs:
Maintenance
$
$
Power
Indirect labor
Total variable costs
$
Fixed costs:
Maintenance
$
Indirect labor
Rent
Total fixed costs
Total overhead costs
$
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2. Prepare an overhead budget that reflects production that is 10 percent higher than expected. Round your answers to the nearest cent, if required.
Meliore, Inc.
Overhead Budget
For the Year Ended December 31
Per DLH
Variable Cost
Variable costs:
Maintenance
$
$
Power
Indirect labor
Total variable costs
$
Fixed costs:
Maintenance
$
Indirect labor
Rent
Total fixed costs
Total overhead costs
$
Show All Feedback
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
Variable Cost
Variable costs:
Maintenance
$
$
Power
Indirect labor
Total variable costs
$
Fixed costs:
Maintenance
$
Indirect labor
Rent
Total fixed costs
Total overhead costs
$
Hide1. Prepare an overhead budget for the expected activity level for the coming year. Round your answers to the nearest cent, if required.
Meliore, Inc.
Overhead Budget
For the Year Ended December 31
Per DLH
Variable Cost
Variable costs:
Maintenance
$
$
Power
Indirect labor
Total variable costs
$
Fixed costs:
Maintenance
$
Indirect labor
Rent
Total fixed costs
Total overhead costs
$
Explanation / Answer
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 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items:
1. Prepare an overhead budget for the expected activity level for the coming year. Round your answers to the nearest cent, if required.
2. Prepare an overhead budget that reflects production that is 10 percent higher than expected. Round your answers to the nearest cent, if required.
3.Prepare an overhead budget for production that is 20 percent lower than expected.
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 300,000 units of the standard model and 120,000 units of the deluxe model during the coming year. The standard model requires 0.05 direct labor hour per unit, and the deluxe model requires 0.08. The controller has developed the following cost formulas for each of the four overhead items:
1. Prepare an overhead budget for the expected activity level for the coming year. Round your answers to the nearest cent, if required.
DLH Total Standard Model 300,000 0.05 15000 Deluxe model 120,000 0.08 9600 24600 Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH Variable Costs Variables Costs Maintenance $1.25 $30,750.00 Power $0.50 $12,300.00 Indirect Labour $2.30 $56,580.00 Total Variable costs $99,630.00 Fixed costs Maintenance $34,500 Indirect Labour $68,400 Rent $31,500 Total fixed costs $134,400 Total overhead costs $234,030.002. Prepare an overhead budget that reflects production that is 10 percent higher than expected. Round your answers to the nearest cent, if required.
DLH Total Standard Model (300,000 x 1.10) 330,000 0.05 16500 Deluxe model (120,000 x 1.10) 132,000 0.08 10560 27060 Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH Variable Costs Variables Costs Maintenance $1.25 $33,825.00 Power $0.50 $13,530.00 Indirect Labour $2.30 $62,238.00 Total Variable costs $109,593.00 Fixed costs Maintenance $34,500 Indirect Labour $68,400 Rent $31,500 Total fixed costs $134,400 Total overhead costs $243,993.003.Prepare an overhead budget for production that is 20 percent lower than expected.
DLH Total Standard Model (300,000 x (1-20%) 240,000 0.05 12000 Deluxe model (120,000 x (1-20%) 96,000 0.08 7680 19680 Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH Variable Costs Variables Costs Maintenance $1.25 $24,600.00 Power $0.50 $9,840.00 Indirect Labour $2.30 $45,264.00 Total Variable costs $79,704.00 Fixed costs Maintenance $34,500 Indirect Labour $68,400 Rent $31,500 Total fixed costs $134,400 Total overhead costs $214,104.00Related Questions
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