Home / Questions / OVERHEAD BUDGET FOR A PARTICULAR LEVEL OF ACTIVITY Regina Johnson controller for PetCare C...
OVERHEAD BUDGET FOR A PARTICULAR LEVEL OF ACTIVITY
Regina Johnson, controller for Pet-Care Company, has been instructed to develop a flexible budget for overhead costs. The company produces two types of dog food. One, BasicDiet, is a standard mixture for healthy dogs. The second, SpecialDiet, is a reduced protein formulation for older dogs with health problems. The two dog foods use common raw materials in different proportions. The company expects to produce 100,000 bags of each product during the coming year. BasicDiet requires 0.25 direct labor hour per bag, and SpecialDiet requires 0.30 direct labor hours per bag. Regina has developed the following fixed and variable costs for each of the four overhead items:
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