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A company’s planned activity level for next year is expected to be 100000 machine hours. At...

A company’s planned activity level for next year is expected to be 100000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs: Variable Fixed Indirect materials $190000 Depreciation $50000Indirect labor 130000 Taxes 10000Factory supplies 27000 Supervision 40000A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of
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Answer #1

Computation of variable costs for 90,000 MH:

Indirect material = ($ 190,000/100,000) x 90,000 = 1.9 x 90,000 = $ 171,000

Indirect labor = ($ 130,000/100,000) x 90,000 = 1.3 x 90,000 = $ 117,000

Factory supplies = ($ 27,000/100,000) x 90,000 = 0.27 x 90,000 = $ 24,300

Total manufacturing overhead = Indirect material + Indirect labor + Factory supplies + Depreciation + Taxes + Supervision

= $ 171,000 + $ 117,000 + $ 24,300 + $ 50,000 + $ 10,000 + $ 40,000 = $ 412,300

Total manufacturing overhead for activity level of 90,000 MH will be $ 412,300

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