Question

All budgeted overhead costs, except for budgeted fixed overhead, are shown.

	3rd Quarter	4th quarter
Budgeted units of production	6,000	7,500
Budgeted variable overhead costs	15,000	18,750
Budgeted fixed overhead costs	?	?
Budgeted amortization including in total overhead	3,000	3,000
Budgeted cash disbursements for total overhead	20,000	23,750

1. a) What is the amount of budgeted fixed overhead?

a.     $8,000

b.     $6,000

c.     $9,000

d.     $3,000

b) Explain why and how it is calculated for the 1st and 2nd Quarters:

Answer 1

a). For 3rd Quarter:
Total Budgeted overhead = Budgeted cash disbusements + Budgeted amortisation
= 20000 + 3000 = 23000
Budgeted variable overhead = 15000
Budgeted Fixed overhead = 23000 - 15000 = 8000

For 4th Quarter:
Total Budgeted overhead = 23750+ 3000 = 26750
Budgeted fixed overhea = 8000
Variable overhead = 26750 - 8000 = 18750 .
Hence answer is a) $8,000

I don't get the requirement of b) i.e for 1st and 2nd Quarter. while nothing is given in the question related to it.