Question

The master budget of Carpenter Company shows that the planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect labor $480,000 Machine supplies 120,000 Indirect materials 140,000 Depreciation on factory building 100,000 Total manufacturing overhead $840,000 A flexible budget for a level of activity of 120,000 machine hours would show total manufacturing overhead costs of:

Answer 1

Answer:

Total overhead cost= $988,000

Explanation:

Giving the following information:

Activity level= 100,000 machine hours

Indirect labor $480,000

Machine supplies 120,000

Indirect materials 140,000

Depreciation on factory building 100,000

First, we need to calculate the unitary overhead costs per machine-hours. Depreciation is a fixed cost.

Indirect labor= 480,000/100,000= $4.8

Machine supplies= 120,000/100,000= $1.2

Indirect materials= 140,000/100,000= $1.4

Now, we can determine the total overhead cost for 120,000 machine hours.

Indirect labor= 4.8*120,000= 576,000

Machine supplies= 1.2*120,000= 144,000

Indirect materials= 1.4*120,000= 168,000

Depreciation= 100,000

Total overhead cost= $988,000