Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

Exercise 60

Flexible Budget for Various Levels of Activity
Palladium Inc. produces a variety of household cleaning products. Palladium's controller has developed standard costs for the following four overhead items:

Next year, Palladium expects production to require 90,000 direct labor hours.
Refer to the information for Palladium Inc. on the previous page.
Required:
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.