Cerium Inc. produces a variety of household cleaning products. Cerium’s controller has developed standard costs for the following four overhead items:

Next year, Cerium expects production to require 58,000 direct labor hours.

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.

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Overhead Item Maintenance Power Indirect labor Rent Total Fixed Cost $113,000 140,000 35,000 Variable Rate per Direct Labor Hour $0.20 0.68 3.70