Cornerstones of Managerial Accounting 4th Edition by Maryanne Mowen, Don Hansen, Dan Heitger

Exercise 9

Flexible Budget for Various Production Levels
Refer to the information for Healthy Pet Company on the previous page.
Required:
1. Calculate the direct labor hours required for production that is 10 percent higher than expected. Calculate the direct labor hours required for production that is 20 percent lower than expected.
2. Prepare an overhead budget that reflects production that is 10 percent higher than expected, and for production that is 20 percent lower than expected.