Question: Overhead Budget, Flexible Budget Spelzig Company manufactures radio-controlled toy cars. Spelzig has developed the following flexible budget for overhead for the coming year. Activity level is measured in direct labor hours.
The factory produces two different toy cars. The production budget for November is 30,000 units for Car W23 and 60,000 units for Car Z280. Car W23 requires 12 minutes of direct labor time, and Car Z280 requires 24 minutes. Fixed overhead costs are incurred uniformly throughout the year.
Required: 1. Calculate the number of direct labor hours needed in November to produce Car W23 and the number of direct labor hours needed in November to produce Car Z280. What are the total direct labor hours budgeted for November?
2. Prepare an overhead budget for November. Round all amounts to the nearest dollar.