Question

16. A company's planned activity level for next year is expected to be 100,000 machine hours....

16. A company's planned activity level for next year is expected to be 100,000 machine

hours. At this level of activity, the company budgeted the following manufacturing overhead costs:

Variable Indirect materials Indirect labor Factory supplies

$120,000 160,000 20,000

Fixed Depreciation Taxes Supervision

$50,000 10,000

40,000

A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of

A) $270,000. B) $360,000. C) $370,000. D) $300,000.


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Answer #1
Answer
Sr No Particular Calculations
a. Total Fixed Cost = $50,000 + $ 10,000 + $40,000
= $ 100000
b. Variable cost per unit = Total Variable cost/estimated machine hours
= ($120,000 + $160,000 + $20,000)/100000
= $3
c. Total manufacturing overhead cost = Total Fixed Cost + Variable cost at the 90,000 machine hours level of activity
= $ 100000 + ($3*90000)
= $ 100000 + $ 270000
= $ 370000
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