Question

See information in Textbook for Exercise 9-63. I need to change one number. Change the expected production number of direct labor hours to be 88,000 instead of the quantity given for that in the exercise

9-63

Palladium INC. produces a variety of household cleaning products. Palladium's controller has developed standard costs for the following four overhead items:

                                     Overhead Item                        total fixed materials                                 variable rate per direct labor hour

                                     Maintenance                                    86,000                                                                  .20

                                      Power                                                                                                                            .45

                                   Indirect labor                                        140,000                                                              2.10

                                     Rent                                                      35,000

Refer to the information for Palladium Inc. above.

1. Prepare an overhead budget for the expected level of direct labor hours for the coming year.

2. Prepare an overhead budget that reflects production that is 15% higher than expected and for production that is 15% lower than expected.

Answer 1

1.)	Direct Labor hours	88,000
		Amount $
	Maintenance	103,600	=86000+(88000*0.2)
	Power	39,600	=88000*0.45
	Indirect Labor	324,800	=140000+(88000*2.1)
	Rent	35,000
	Overhead Budget	503,000
2.)	Direct Labor hours	101,200	=88000*115%
	(15% higher than expected)
		Amount $
	Maintenance	106,240	=86000+(101200*0.2)
	Power	45,540	=101200*0.45
	Indirect Labor	352,520	=140000+(101200*2.1)
	Rent	35,000
	Overhead Budget	539,300
	Direct Labor hours	74,800	=88000*85%
	(15% lower than expected)
		Amount $
	Maintenance	100,960	=86000+(74800*0.2)
	Power	33,660	=74800*0.45
	Indirect Labor	297,080	=140000+(74800*2.1)
	Rent	35,000
	Overhead Budget	466,700