- Tees Fashion Manufactures Work Suits Overalls And Safety Shoes Tees Fashion Accountant Has Estimated The Cost Formula 1 (147.35 KiB) Viewed 35 times
Tees Fashion manufactures work suits, overalls, and safety shoes. Tees Fashion accountant has estimated the cost formulas for overhead Indirect labor cost =$90,000+ $0.50 per direct labor hour Maintenance = $45,000+ $0.40 per machine hour Power $0.15 per machine hour Depreciation $150,000 Other $63,000+ $1.30 per direct labor hour In the coming year, Tees Fashion is considering three budgeting scenarios: conservative (assumes increased co from other companies), expected, and optimistic (assumes a particularly robust economy). Anticipated quantiti each type of product appear in the following table: Product Conservative Expected Optimistic Worksuits 60 000 140 000 150 000 Overalls 20 000 40 000 80 000 Safety shoes 15 000 25 000 50 000 The standard amounts for one unit of each type of product are as follows: Work suits Overalls Safety Shoe Direct materials $5.00 $4.00 $8.00 Direct labor hours 1.2 hours 1.0 hour 2.5 hours Machine hours 1.0 hour 0.75 hour 2.0 hours Direct labor costs $8 per hour Required: Prepare a flexible overhead budget for the three potential scenarios.