Asked by Reveti Kuche on May 20, 2024
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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 $90,000 Depreciation $37,500 Indirect labor 120,000 Taxes 7,500 Factory supplies 15,000 Supervision 30,000\begin{array}{lrlr}\text { Variable }&&\text { Fixed }\\\hline \text { Indirect materials } & \$ 90,000 & \text { Depreciation } & \$ 37,500 \\\text { Indirect labor } & 120,000 & \text { Taxes } & 7,500 \\\text { Factory supplies } & 15,000 & \text { Supervision } & 30,000\end{array} Variable Indirect materials Indirect labor Factory supplies $90,000120,00015,000 Fixed Depreciation Taxes Supervision $37,5007,50030,000 A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of
A) $202500.
B) $270000.
C) $277500.
D) $225000.
Manufacturing Overhead
Indirect factory-related costs that are incurred when producing a product, which can include utilities, maintenance, and factory equipment depreciation.
Variable
An element, feature, or factor that is likely to vary or change; it could also refer to costs that fluctuate with the level of output.
Fixed Costs
Costs that do not vary with the level of production or sales, such as rent or salaries, providing predictability for budgeting.
- Examine the impact of varying levels of activity on projected expenses.
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Learning Objectives
- Examine the impact of varying levels of activity on projected expenses.
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