Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen

تمرين 20

FLEXIBLE BUDGET
In an attempt to improve budgeting, the controller for Hilbert Products has developed a flexible budget for overhead costs. Hilbert Products makes two types of paper-based cloths: counter wipes and floor wipes. Hilbert expects to produce 500,000 rolls of each product during the coming year. Counter wipes require 0.02 direct labor hour per roll, and floor wipes require 0.06. The controller has developed the following cost formulas for each of the four overhead items:

Required:
1. Prepare an overhead budget for the expected activity level for the coming year.
2. Prepare an overhead budget that reflects production that is 10 percent higher than expected (for both products) and a budget for production that is 20 percent lower than expected.