Question

On January 1, 2017, X Company developed the following overhead cost function for the year: $212,000...

On January 1, 2017, X Company developed the following overhead cost function for the year: $212,000 + $8.77X, where X is the number of units produced. The following additional information for 2017 is available:

1. What was the 2017 master (static) budget for total overhead?

2. What was the 2017 flexible budget for total overhead?

Budgeted production 10,400 units
Actual production 9,800 units
Actual fixed costs $214,000
Actual variable costs per unit

$9.07
Business   Accounting   
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Homework Answers

Answer #1
  • Requirement #1

Just put ‘budgeted production units’ in place of ‘X’ in the cost equation to calculate Budget for Total Overhead.

Equation: $ 212000 + $8.77X

Total Overhead [master Budget] = 212000 + (8.77 x 10400 units)

Total Overhead [master Budget] = 212000 + 91208

Total Overhead [master Budget]= $ 303,208

  • Requirement #2

Just put ‘actual production units’ in place of ‘X’ in the cost equation to calculate Budget for Total Overhead.

Equation: $ 212000 + $8.77X

Total Overhead [Flexible Budget] = 212000 + (8.77 x 9800 units)

Total Overhead [Flexible Budget] = 212000 + 85946

Total Overhead [Flexible Budget] = $ 297,946

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