In an attempt to improve budgeting, the controller for Engersol, Inc., has developed a flexible budget for overhead costs. Engersol, Inc., makes two types of products, commercial floor cleaners and household floor cleaners. The company expects to produce 300,000 units of the commercial cleaner and 140,000 units of the household cleaner during the coming year. The commercial cleaner requires 0.10 direct labor hour per unit, and the household cleaner requires 0.16. The controller has developed the following cost formulas for each of the four overhead items: Cost Formula Maintenance $34,300 + $1.25 DLH Power $0.50 DLH Indirect labor $68,200 + $2.30 DLH Rent $31,700 Required: Question Content Area 1. Prepare an overhead budget for the expected activity level for the coming year. Engersol, Inc.Overhead BudgetFor the Year Ended December 31 Per DLH blank Budgeted direct labor hours blank fill in the blank f1f2b702a037fe7_1 blank Variable costs: Maintenance $fill in the blank f1f2b702a037fe7_2 $fill in the blank f1f2b702a037fe7_3 Power fill in the blank f1f2b702a037fe7_4 fill in the blank f1f2b702a037fe7_5 Indirect labor fill in the blank f1f2b702a037fe7_6 fill in the blank f1f2b702a037fe7_7 Total variable costs $fill in the blank f1f2b702a037fe7_8 Fixed costs: Maintenance $fill in the blank f1f2b702a037fe7_9 Indirect labor fill in the blank f1f2b702a037fe7_10 Rent fill in the blank f1f2b702a037fe7_11 Total fixed costs fill in the blank f1f2b702a037fe7_12 Total overhead costs $fill in the blank f1f2b702a037fe7_13 Feedback Area Feedback The overhead budget shows the expected cost of all indirect manufacturing costs. It is based on variable and fixed overhead used in production. Question Content Area 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products). Engersol, Inc.Overhead BudgetFor the Year Ended December 31 Per DLH blank blank Budgeted direct labor hours blank fill in the blank 5433cbf9ff8101d_1 blank Variable costs: Maintenance $fill in the blank 5433cbf9ff8101d_2 $fill in the blank 5433cbf9ff8101d_3 Power fill in the blank 5433cbf9ff8101d_4 fill in the blank 5433cbf9ff8101d_5 Indirect labor fill in the blank 5433cbf9ff8101d_6 fill in the blank 5433cbf9ff8101d_7 Total variable costs $fill in the blank 5433cbf9ff8101d_8 Fixed costs: Maintenance $fill in the blank 5433cbf9ff8101d_9 Indirect labor fill in the blank 5433cbf9ff8101d_10 Rent fill in the blank 5433cbf9ff8101d_11 Total fixed costs fill in the blank 5433cbf9ff8101d_12 Total overhead costs $fill in the blank 5433cbf9ff8101d_13 Feedback Area Feedback Consider what this will affect and fill out the two schedules keeping in mind the definition of fixed overhead and variable overhead. Question Content Area Prepare an overhead budget for production that is 20 percent lower than expected. Engersol, Inc.Overhead BudgetFor the Year Ended December 31 Per DLH blank blank Budgeted direct labor hours blank fill in the blank 81023dfe903eff7_1 blank Variable costs: Maintenance $fill in the blank 81023dfe903eff7_2 $fill in the blank 81023dfe903eff7_3 Power fill in the blank 81023dfe903eff7_4 fill in the blank 81023dfe903eff7_5 Indirect labor fill in the blank 81023dfe903eff7_6 fill in the blank 81023dfe903eff7_7 Total variable costs $fill in the blank 81023dfe903eff7_8 Fixed costs: Maintenance $fill in the blank 81023dfe903eff7_9 Indirect labor fill in the blank 81023dfe903eff7_10 Rent fill in the blank 81023dfe903eff7_11 Total fixed costs fill in the blank 81023dfe903eff7_12 Total overhead costs $fill in the blank 81023dfe903eff7_13
In an attempt to improve budgeting, the controller for Engersol, Inc., has developed a flexible budget for overhead costs. Engersol, Inc., makes two types of products, commercial floor cleaners and household floor cleaners. The company expects to produce 300,000 units of the commercial cleaner and 140,000 units of the household cleaner during the coming year. The commercial cleaner requires 0.10 direct labor hour per unit, and the household cleaner requires 0.16. The controller has developed the following cost formulas for each of the four overhead items: Cost Formula Maintenance $34,300 + $1.25 DLH Power $0.50 DLH Indirect labor $68,200 + $2.30 DLH Rent $31,700 Required: Question Content Area 1. Prepare an overhead budget for the expected activity level for the coming year. Engersol, Inc.Overhead BudgetFor the Year Ended December 31 Per DLH blank Budgeted direct labor hours blank fill in the blank f1f2b702a037fe7_1 blank Variable costs: Maintenance $fill in the blank f1f2b702a037fe7_2 $fill in the blank f1f2b702a037fe7_3 Power fill in the blank f1f2b702a037fe7_4 fill in the blank f1f2b702a037fe7_5 Indirect labor fill in the blank f1f2b702a037fe7_6 fill in the blank f1f2b702a037fe7_7 Total variable costs $fill in the blank f1f2b702a037fe7_8 Fixed costs: Maintenance $fill in the blank f1f2b702a037fe7_9 Indirect labor fill in the blank f1f2b702a037fe7_10 Rent fill in the blank f1f2b702a037fe7_11 Total fixed costs fill in the blank f1f2b702a037fe7_12 Total overhead costs $fill in the blank f1f2b702a037fe7_13 Feedback Area Feedback The overhead budget shows the expected cost of all indirect manufacturing costs. It is based on variable and fixed overhead used in production. Question Content Area 2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products). Engersol, Inc.Overhead BudgetFor the Year Ended December 31 Per DLH blank blank Budgeted direct labor hours blank fill in the blank 5433cbf9ff8101d_1 blank Variable costs: Maintenance $fill in the blank 5433cbf9ff8101d_2 $fill in the blank 5433cbf9ff8101d_3 Power fill in the blank 5433cbf9ff8101d_4 fill in the blank 5433cbf9ff8101d_5 Indirect labor fill in the blank 5433cbf9ff8101d_6 fill in the blank 5433cbf9ff8101d_7 Total variable costs $fill in the blank 5433cbf9ff8101d_8 Fixed costs: Maintenance $fill in the blank 5433cbf9ff8101d_9 Indirect labor fill in the blank 5433cbf9ff8101d_10 Rent fill in the blank 5433cbf9ff8101d_11 Total fixed costs fill in the blank 5433cbf9ff8101d_12 Total overhead costs $fill in the blank 5433cbf9ff8101d_13 Feedback Area Feedback Consider what this will affect and fill out the two schedules keeping in mind the definition of fixed overhead and variable overhead. Question Content Area Prepare an overhead budget for production that is 20 percent lower than expected. Engersol, Inc.Overhead BudgetFor the Year Ended December 31 Per DLH blank blank Budgeted direct labor hours blank fill in the blank 81023dfe903eff7_1 blank Variable costs: Maintenance $fill in the blank 81023dfe903eff7_2 $fill in the blank 81023dfe903eff7_3 Power fill in the blank 81023dfe903eff7_4 fill in the blank 81023dfe903eff7_5 Indirect labor fill in the blank 81023dfe903eff7_6 fill in the blank 81023dfe903eff7_7 Total variable costs $fill in the blank 81023dfe903eff7_8 Fixed costs: Maintenance $fill in the blank 81023dfe903eff7_9 Indirect labor fill in the blank 81023dfe903eff7_10 Rent fill in the blank 81023dfe903eff7_11 Total fixed costs fill in the blank 81023dfe903eff7_12 Total overhead costs $fill in the blank 81023dfe903eff7_13
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter7: The Master Budget And Flexible Budgeting
Section: Chapter Questions
Problem 2P: Sales, production, direct materials, direct labor, and factory overhead budgets King Tire Co.s...
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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 Engersol, Inc., has developed a flexible budget for overhead costs. Engersol, Inc., makes two types of products, commercial floor cleaners and household floor cleaners. The company expects to produce 300,000 units of the commercial cleaner and 140,000 units of the household cleaner during the coming year. The commercial cleaner requires 0.10 direct labor hour per unit, and the household cleaner requires 0.16. The controller has developed the following cost formulas for each of the four overhead items:
| Cost Formula | |
| Maintenance | $34,300 + $1.25 DLH |
| Power | $0.50 DLH |
| Indirect labor | $68,200 + $2.30 DLH |
| Rent | $31,700 |
Required:
Question Content Area
1. Prepare an overhead budget for the expected activity level for the coming year.
| Per DLH | blank | ||
|---|---|---|---|
| Budgeted direct labor hours | blank | fill in the blank f1f2b702a037fe7_1 | blank |
| Variable costs: | |||
| Maintenance | $fill in the blank f1f2b702a037fe7_2 | $fill in the blank f1f2b702a037fe7_3 | |
| Power | fill in the blank f1f2b702a037fe7_4 | fill in the blank f1f2b702a037fe7_5 | |
| Indirect labor | fill in the blank f1f2b702a037fe7_6 | fill in the blank f1f2b702a037fe7_7 | |
| Total variable costs | $fill in the blank f1f2b702a037fe7_8 | ||
| Fixed costs: | |||
| Maintenance | $fill in the blank f1f2b702a037fe7_9 | ||
| Indirect labor | fill in the blank f1f2b702a037fe7_10 | ||
| Rent | fill in the blank f1f2b702a037fe7_11 | ||
| Total fixed costs | fill in the blank f1f2b702a037fe7_12 | ||
| Total overhead costs | $fill in the blank f1f2b702a037fe7_13 |
Feedback Area
Feedback
The overhead budget shows the expected cost of all indirect
Question Content Area
2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products).
| Per DLH | blank | blank | |
|---|---|---|---|
| Budgeted direct labor hours | blank | fill in the blank 5433cbf9ff8101d_1 | blank |
| Variable costs: | |||
| Maintenance | $fill in the blank 5433cbf9ff8101d_2 | $fill in the blank 5433cbf9ff8101d_3 | |
| Power | fill in the blank 5433cbf9ff8101d_4 | fill in the blank 5433cbf9ff8101d_5 | |
| Indirect labor | fill in the blank 5433cbf9ff8101d_6 | fill in the blank 5433cbf9ff8101d_7 | |
| Total variable costs | $fill in the blank 5433cbf9ff8101d_8 | ||
| Fixed costs: | |||
| Maintenance | $fill in the blank 5433cbf9ff8101d_9 | ||
| Indirect labor | fill in the blank 5433cbf9ff8101d_10 | ||
| Rent | fill in the blank 5433cbf9ff8101d_11 | ||
| Total fixed costs | fill in the blank 5433cbf9ff8101d_12 | ||
| Total overhead costs | $fill in the blank 5433cbf9ff8101d_13 |
Feedback Area
Feedback
Consider what this will affect and fill out the two schedules keeping in mind the definition of fixed overhead and variable overhead.
Question Content Area
Prepare an overhead budget for production that is 20 percent lower than expected.
| Per DLH | blank | blank | |
|---|---|---|---|
| Budgeted direct labor hours | blank | fill in the blank 81023dfe903eff7_1 | blank |
| Variable costs: | |||
| Maintenance | $fill in the blank 81023dfe903eff7_2 | $fill in the blank 81023dfe903eff7_3 | |
| Power | fill in the blank 81023dfe903eff7_4 | fill in the blank 81023dfe903eff7_5 | |
| Indirect labor | fill in the blank 81023dfe903eff7_6 | fill in the blank 81023dfe903eff7_7 | |
| Total variable costs | $fill in the blank 81023dfe903eff7_8 | ||
| Fixed costs: | |||
| Maintenance | $fill in the blank 81023dfe903eff7_9 | ||
| Indirect labor | fill in the blank 81023dfe903eff7_10 | ||
| Rent | fill in the blank 81023dfe903eff7_11 | ||
| Total fixed costs | fill in the blank 81023dfe903eff7_12 | ||
| Total overhead costs | $fill in the blank 81023dfe903eff7_13 |
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