Cerium Inc. produces a variety of household cleaning products. Cerium's controller has developed standard costs for the following four overhead items: Variable Rate per Direct Labor Hour Overhead Item Maintenance Power Indirect labor 140,000 Rent 35,000 Next year, Cerium expects production to require 58,000 direct labor hours. Required: 1. Prepare an overhead budget for the expected level of direct labor hours for the coming year. Cerium Inc. Overhead Budget For the Coming Year Line Item Description Rate per Hour Variable costs: Maintenance Power Indirect labor Total variable cost Fixed costs: Total Fixed Cost $113,000 Maintenance Indirect labor Rent Total fixed costs Total overhead costs E $0.20 0.68 3.70 Activity Level 58,000 Hours

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Flexible 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:
Variable Rate per Direct
Labor Hour
Overhead Item
Maintenance
Variable costs:
Maintenance
Power
Indirect labor
140,000
Rent
35,000
Next year, Cerium expects production to require 58,000 direct labor hours.
Required:
1. Prepare an overhead budget for the expected level of direct labor hours for the coming year.
Cerium Inc.
Overhead Budget
For the Coming Year
Line Item Description Rate per Hour
Power
Indirect labor
Total variable cost
Fixed costs:
Maintenance
Indirect labor
Total Fixed Cost
$ 113,000
Rent
Total fixed costs
Total overhead costs
Activity Level
58,000 Hours
$0.20
0.68
3.70
0000 00000
Transcribed Image Text:Flexible 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: Variable Rate per Direct Labor Hour Overhead Item Maintenance Variable costs: Maintenance Power Indirect labor 140,000 Rent 35,000 Next year, Cerium expects production to require 58,000 direct labor hours. Required: 1. Prepare an overhead budget for the expected level of direct labor hours for the coming year. Cerium Inc. Overhead Budget For the Coming Year Line Item Description Rate per Hour Power Indirect labor Total variable cost Fixed costs: Maintenance Indirect labor Total Fixed Cost $ 113,000 Rent Total fixed costs Total overhead costs Activity Level 58,000 Hours $0.20 0.68 3.70 0000 00000
2. 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
Variable costs:
Maintenance
Power
Indirect labor
Total variable costs
Fixed costs:
Maintenance
Indirect labor
Rent
Total fixed costs
Total overhead costs
Rate per Hour
Hours
Hours
$
Transcribed Image Text:2. 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 Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs Rate per Hour Hours Hours $
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