Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for healthy dogs. SpecialDiet is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 80,000 bags of each product during the coming year. BasicDiet requires 0.20 direct labor hour per bag, and SpecialDiet requires 0.30 direct labor hour per bag. Ladan has developed the following fixed and variable costs for each of the four overhead items: Overhead Item Fixed Cost Variable Rate per Direct Labor Hour Maintenance $ 57,250           $0.50                    Power   0.40                    Indirect labor 43,500           2.10                    Rent 39,000            Required: 1. Calculate the total direct labor hours required for the production of 80,000 bags of BasicDiet and 80,000 bags of SpecialDiet. fill in the blank acd3200b0fa803e_1 hours   2. Prepare an overhead budget for the expected activity level (calculated in Requirement 1) for the coming year.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Ladan Suriman, controller for Healthy Pet Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. BasicDiet is a standard mixture for healthy dogs. SpecialDiet is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 80,000 bags of each product during the coming year. BasicDiet requires 0.20 direct labor hour per bag, and SpecialDiet requires 0.30 direct labor hour per bag. Ladan has developed the following fixed and variable costs for each of the four overhead items:

Overhead Item Fixed Cost Variable Rate per Direct
Labor Hour
Maintenance $ 57,250           $0.50                   
Power   0.40                   
Indirect labor 43,500           2.10                   
Rent 39,000            
Required:

1. Calculate the total direct labor hours required for the production of 80,000 bags of BasicDiet and 80,000 bags of SpecialDiet.

fill in the blank acd3200b0fa803e_1 hours
 

2. Prepare an overhead budget for the expected activity level (calculated in Requirement 1) for the coming year.

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