Question: Flexible Budgeting Orchard Fresh Inc. purchases fruit from numerous growers and packs fruit boxes and fruit baskets for sale. Orchard Fresh has developed the following flexible budget for overhead for the coming year. Activity level is measured in direct labor hours.
Required: 1. Prepare a flexible budget for May, using 200, 240, and 280 direct labor hours.
2. The Cushing High School Parent-Teacher Organization ordered 200 gift baskets from Orchard Fresh to be given to high school teachers and support staff as a thank you for a successful school year. These gift baskets must be ready by May 31 and were not included in the original production budget for May. Without preparing a new overhead budget, what is the new total budgeted overhead for May for Orchard Fresh?