Flexible Budget for Various Levels of Activity Palladium Inc. produces a variety of household cleaning products. Palladium’s controller has developed standard costs for the following four overhead items: Overhead Item Total Fixed Cost Variable Rate per 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. Palladium Inc. Overhead Budget For the Coming Year Variable costs: Rate per Hour Activity Level 90,000 Hours Maintenance $fill in the blank 0ef6bf055076030_1 $fill in the blank 0ef6bf055076030_2 Power fill in the blank 0ef6bf055076030_3 fill in the blank 0ef6bf055076030_4 Indirect labor fill in the blank 0ef6bf055076030_5 fill in the blank 0ef6bf055076030_6 Total variable cost $fill in the blank 0ef6bf055076030_7 Fixed costs: Maintenance $fill in the blank 0ef6bf055076030_8 Indirect labor fill in the blank 0ef6bf055076030_9 Rent fill in the blank 0ef6bf055076030_10 Total fixed costs $fill in the blank 0ef6bf055076030_11 Total overhead costs $fill in the blank 0ef6bf055076030_12 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 Rate per Hour fill in the blank 4e970707000bfc3_1 Hours fill in the blank 4e970707000bfc3_2 Hours Variable costs: Maintenance $fill in the blank 4e970707000bfc3_3 $ fill in the blank 4e970707000bfc3_4 $ fill in the blank 4e970707000bfc3_5 Power fill in the blank 4e970707000bfc3_6 fill in the blank 4e970707000bfc3_7 fill in the blank 4e970707000bfc3_8 Indirect labor fill in the blank 4e970707000bfc3_9 fill in the blank 4e970707000bfc3_10 fill in the blank 4e970707000bfc3_11 Total variable costs $fill in the blank 4e970707000bfc3_12 $fill in the blank 4e970707000bfc3_13 Fixed costs: Maintenance $ fill in the blank 4e970707000bfc3_14 $ fill in the blank 4e970707000bfc3_15 Indirect labor fill in the blank 4e970707000bfc3_16 fill in the blank 4e970707000bfc3_17 Rent fill in the blank 4e970707000bfc3_18 fill in the blank 4e970707000bfc3_19 Total fixed costs $fill in the blank 4e970707000bfc3_20 $fill in the blank 4e970707000bfc3_21 Total overhead costs $fill in the blank 4e970707000bfc3_22 $fill in the blank 4e970707000bfc3_23

Flexible Budget for Various Levels of Activity Palladium Inc. produces a variety of household cleaning products. Palladium’s controller has developed standard costs for the following four overhead items: Overhead Item Total Fixed Cost Variable Rate per 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. Palladium Inc. Overhead Budget For the Coming Year Variable costs: Rate per Hour Activity Level 90,000 Hours Maintenance $fill in the blank 0ef6bf055076030_1 $fill in the blank 0ef6bf055076030_2 Power fill in the blank 0ef6bf055076030_3 fill in the blank 0ef6bf055076030_4 Indirect labor fill in the blank 0ef6bf055076030_5 fill in the blank 0ef6bf055076030_6 Total variable cost $fill in the blank 0ef6bf055076030_7 Fixed costs: Maintenance $fill in the blank 0ef6bf055076030_8 Indirect labor fill in the blank 0ef6bf055076030_9 Rent fill in the blank 0ef6bf055076030_10 Total fixed costs $fill in the blank 0ef6bf055076030_11 Total overhead costs $fill in the blank 0ef6bf055076030_12 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 Rate per Hour fill in the blank 4e970707000bfc3_1 Hours fill in the blank 4e970707000bfc3_2 Hours Variable costs: Maintenance $fill in the blank 4e970707000bfc3_3 $ fill in the blank 4e970707000bfc3_4 $ fill in the blank 4e970707000bfc3_5 Power fill in the blank 4e970707000bfc3_6 fill in the blank 4e970707000bfc3_7 fill in the blank 4e970707000bfc3_8 Indirect labor fill in the blank 4e970707000bfc3_9 fill in the blank 4e970707000bfc3_10 fill in the blank 4e970707000bfc3_11 Total variable costs $fill in the blank 4e970707000bfc3_12 $fill in the blank 4e970707000bfc3_13 Fixed costs: Maintenance $ fill in the blank 4e970707000bfc3_14 $ fill in the blank 4e970707000bfc3_15 Indirect labor fill in the blank 4e970707000bfc3_16 fill in the blank 4e970707000bfc3_17 Rent fill in the blank 4e970707000bfc3_18 fill in the blank 4e970707000bfc3_19 Total fixed costs $fill in the blank 4e970707000bfc3_20 $fill in the blank 4e970707000bfc3_21 Total overhead costs $fill in the blank 4e970707000bfc3_22 $fill in the blank 4e970707000bfc3_23

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Flexible Budget for Various Levels of Activity

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

Overhead Item	Total Fixed Cost	Variable Rate per 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.

Palladium Inc.
Overhead Budget
For the Coming Year
Variable costs:	Rate per Hour	Activity Level 90,000 Hours
Maintenance	$fill in the blank 0ef6bf055076030_1	$fill in the blank 0ef6bf055076030_2
Power	fill in the blank 0ef6bf055076030_3	fill in the blank 0ef6bf055076030_4
Indirect labor	fill in the blank 0ef6bf055076030_5	fill in the blank 0ef6bf055076030_6
Total variable cost		$fill in the blank 0ef6bf055076030_7

Fixed costs:
Maintenance		$fill in the blank 0ef6bf055076030_8
Indirect labor		fill in the blank 0ef6bf055076030_9
Rent		fill in the blank 0ef6bf055076030_10
Total fixed costs		$fill in the blank 0ef6bf055076030_11
Total overhead costs		$fill in the blank 0ef6bf055076030_12

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
	Rate per Hour	fill in the blank 4e970707000bfc3_1 Hours	fill in the blank 4e970707000bfc3_2 Hours
Variable costs:
Maintenance	$fill in the blank 4e970707000bfc3_3	$ fill in the blank 4e970707000bfc3_4	$ fill in the blank 4e970707000bfc3_5
Power	fill in the blank 4e970707000bfc3_6	fill in the blank 4e970707000bfc3_7	fill in the blank 4e970707000bfc3_8
Indirect labor	fill in the blank 4e970707000bfc3_9	fill in the blank 4e970707000bfc3_10	fill in the blank 4e970707000bfc3_11
Total variable costs		$fill in the blank 4e970707000bfc3_12	$fill in the blank 4e970707000bfc3_13
Fixed costs:
Maintenance		$ fill in the blank 4e970707000bfc3_14	$ fill in the blank 4e970707000bfc3_15
Indirect labor		fill in the blank 4e970707000bfc3_16	fill in the blank 4e970707000bfc3_17
Rent		fill in the blank 4e970707000bfc3_18	fill in the blank 4e970707000bfc3_19
Total fixed costs		$fill in the blank 4e970707000bfc3_20	$fill in the blank 4e970707000bfc3_21
Total overhead costs		$fill in the blank 4e970707000bfc3_22	$fill in the blank 4e970707000bfc3_23

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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