Question

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000. The budget for 25,000 hours would reveal total overhead costs of: $350,000. None of the answers is correct. $290,000. $270,000. $210,000.

Answer 1

Answer:

$270,000

Explanation:

The computation of overhead cost is shown below:-

Variable manufacturing overhead = Manufacturing overhead ÷ Flexible budget

= $90,000 ÷ 15,000 hours

= $6 per hour

Total overhead costs for $25000 hours = Variable manufacturing costs + Fixed manufacturing costs

= $25,000 × $6 per hour + $120,000

= $150,000 + $120,000

= $270,000