Question

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 $50000
Depreciation $37500
Indirect labor 80000
Taxes 7500
Factory supplies 9000
Supervision 30000
A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of

Answer 1

Answer:

The total manufacturing overhead is $200,100

Explanation:

The flexible budget prepared below is based on the original budget for 100,000 machine hours adjusted to 90,000 hours

indirect materials(variable)$50,000/100,000*90,000=$45,000

depreciation(fixed)                                                          =$37,500

indirect labor(variable )$80,000/100,000*90,000       =$72000

taxes(fixed)                                                                       =$7,500

factory supplies(variable)$9000/100,000*90000         =$8,100

supervision(fixed)                                                             =$30,000

total manufacturing overhead                                          $200,100

The total manufacturing overhead is $200,100 based on the fact that variable cost varies with output  while fixed costs remain the same