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3 years ago

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A company's planned activity level for next year is expected to be 100,000 machine hours.At this level of activity, the company

budgeted the following manufacturing overhead costs:Variable Fixed Indirect materials $120,000 Depreciation $50,000Indirect labor 160,000 Taxes 10,000Factory supplies 20,000 Supervision 40,000Required:If a flexible budget is prepared at the 90,000 machine hours level of activity, what would be the total manufacturing overhead costs?

1 answer:

valentina_108 [34]3 years ago

5 0

Answer:

At Activity level 90,000 machine hours Total Manufacturing Overheads $ 360,000

At Activity level 100,000 machine hours <u>T</u>otal Manufacturing Overheads $400,000

Explanation:

At Activity level 100,000 machine hours

Variable Fixed

Indirect materials $120,000

Depreciation $50,000

Indirect labor 160,000

Taxes 10,000

Factory supplies 20,000

<u>Supervision 40,000</u>

<u>Total Manufacturing Overheads $400,000</u>

<em>We divide the total overheads with the total machine hours and multiply it with the 90,000 machine hours to get the overheads at this activity level.</em>

At Activity level 90,000 machine hours

Indirect materials ($120,000/100,000 )*90,000 = $ 108,000

Depreciation ($50,000/100,000 )*90,000 = $ 45,000

Indirect labor (160,000 /100,000 )*90,000 = $ 144,000

Taxes (10,000/100,000 )*90,000 = $ 9,000

Factory supplies (20,000 /100,000 )*90,000 = $ 18,000

<u>Supervision (40,000/100,000 )*90,000 = $ 36,000</u>

<u>Total Manufacturing Overheads $ 360,000</u>

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