Question

# Birkner Corporation's flexible budget performance report for last month shows that actual indirect materials cost, a...

Birkner Corporation's flexible budget performance report for last month shows that actual indirect materials cost, a variable cost, was \$30,444 and that the spending variance for indirect materials cost was \$8,142 favorable. During that month, the company worked 17,700 machine-hours. Budgeted activity for the month had been 18,200 machine-hours. The cost formula per machine-hour for indirect materials cost must have been closest to:

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity level 2,400 machine-hours Variable overhead costs: Supplies \$ 10,560 Indirect labor 19,920 Fixed overhead costs: Supervision 15,600 Utilities 5,800 Depreciation 6,800 Total overhead cost \$ 58,680 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 2,300 machine-hours rather than 2,400 machine-hours?

 1 Indirect materials cost in flexible budget = 30444+8142= \$38586 Cost formula per machine-hour for indirect materials cost = 38586/17700 = \$2.18 2 2300 machine hours Supplies 10120 =10560/2400*2300 Indirect labor 19090 =19920/2400*2300 Supervision 15600 Utilities 5800 Depreciation 6800 Total overhead cost 57410 Total budgeted overhead cost at 2,300 machine-hours = \$57410

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