Overhead Item Maintenance Power Indirect labor 140,000 Rent 35,000 Next year, Cerium expects production to require 58,000 direct labor hours. Required: Variable costs: Maintenance 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 Rent Total Fixed Cost $ 113,000 Total fixed costs Total overhead costs Labor Hour Activity Level 58,000 Hours $0.20 0.68 3.70
Overhead Item Maintenance Power Indirect labor 140,000 Rent 35,000 Next year, Cerium expects production to require 58,000 direct labor hours. Required: Variable costs: Maintenance 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 Rent Total Fixed Cost $ 113,000 Total fixed costs Total overhead costs Labor Hour Activity Level 58,000 Hours $0.20 0.68 3.70
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Overhead Item
Maintenance
Power
Indirect labor
Rent
140,000
35,000
Next year, Cerium expects production to require 58,000 direct labor hours.
Required:
Variable costs:
Maintenance
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
Rent
Total fixed costs
Total Fixed Cost
$ 113,000
Total overhead costs
$
Labor Hour
Activity Level
58,000 Hours
$0.20
0.68
3.70
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
tA
Hours
A
Hours
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