Timothy, SA., uses a flexible budget for overhead costs. The company expects to produce 40,000 units of the product it manufactures. Each unit requires 0.40 direct labour hours. The cost formulas for each of the four overhead items (where X is measured in direct labour hours) is as follows: 
Required:
a.
Prepare an overhead budget for the expected activity level for the coming year.
b.
Prepare an overhead budget that reflects production that is 25 per cent lower than expected.
Definitions:
Drivers' Average Speed
Refers to the mean speed at which drivers operate their vehicles over a certain stretch of road or within a specific area.
Number of Accidents
A count of unintended or unexpected events resulting in damage or injury within a specified period or context.
Regression Equation
A mathematical formula that describes the relationship between one dependent variable and one or more independent variables.
Predict
The act of using data, statistical models, or patterns to make forecasts or estimates about future events or outcomes.
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