Flexible BudgetIn 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 300,000units of the standard model and 150,000 units of the deluxe model during the coming year. The standard model requires 0.10 direct labor hour per unit, and the deluxe model requires 0.16. The controller has developed the following cost formulasfor each of the four overhead items:Cost FormulaMaintenance$34,600 + $1.25 DLHPower$0.50 DLHIndirect labor$68.200 + $2.30 DLHRent$31,700Required:1. Prepare an overhead budget for the expected activity level for the coming year.Meliore, Inc.Overhead BudgetFor the Year Ended December 31Per DLHBudgeted direct labor hours0.10X DLHVariable costs:MaintenancePowerIndirect laborXTotal variable costsFixed costs:MaintenanceIndirect laborXRentTotal fixed costsTotal overhead costs$1X

Budgeted variable overhead costs = budgeted variable overhead rate x budgeted activity. Overhead…

Required: 1. Prepare an overhead budget for the expected activity level for the coming year. Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH Budgeted direct labor hours 0.10 X DLH Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs

Required: 1. Prepare an overhead budget for the expected activity level for the coming year. Meliore, Inc. Overhead Budget For the Year Ended December 31 Per DLH Budgeted direct labor hours 0.10 X DLH Variable costs: Maintenance Power Indirect labor Total variable costs Fixed costs: Maintenance Indirect labor Rent Total fixed costs Total overhead costs

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter6: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 1CMA: Taylor Corporation is analyzing the cost behavior of three cost items, A, B, and C, to budget for...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

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 150,000 units of the deluxe model during the coming year. The standard model requires 0.10 direct labor hour per unit, and the deluxe model requires 0.16. The controller has developed the following cost formulas
for each of the four overhead items:
Cost Formula
Maintenance
$34,600 + $1.25 DLH
Power
$0.50 DLH
Indirect labor
$68.200 + $2.30 DLH
Rent
$31,700
Required:
1. Prepare an overhead budget for the expected activity level for the coming year.
Meliore, Inc.
Overhead Budget
For the Year Ended December 31
Per DLH
Budgeted direct labor hours
0.10
X DLH
Variable costs:
Maintenance
Power
Indirect labor
X
Total variable costs
Fixed costs:
Maintenance
Indirect labor
X
Rent
Total fixed costs
Total overhead costs
$1
X

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