The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at the 75% capacity level. 1&2. Prepare flexible overhead budgets for October showing the amounts of each variable and fixed cost at the 65%, 75%, and 85% capacity levels and classify all items listed in the fixed budget as variable or fixed.

Missing information:

Direct materials (4.0 lbs. x $4.00 per lb.)$ 16.00

Direct labor (2.0 hrs. x $11.00 per hr.)22.00  

Overhead (2.0 hrs. x $18.50 per hr.)37.00

Total standard cost$ 75.00

Overhead Budget (75% Capacity)

Variable overhead costs  

 Indirect materials$ 15,000  

 Indirect labor75,000  

 Power15,000  

 Repairs and maintenance30,000  

Total variable overhead costs  $ 135,000

Fixed overhead costs  

 Depreciation--building25,000  

 Depreciation--machinery72,000  

 Taxes and insurance18,000  

 Supervision305,000  

     Total fixed overhead costs  420,000

Total overhead costs  $555,000

I used an excel spreadsheet to calculate the flexible budget because there is no room here. The production levels represent 13,000 units, 15,000 units and 17,000 units respectively. As total output increases, cost per unit decreases.

answerinnovative culture;