The master budget of Windy Co.shows that the planned activity level for next year is expected to be 50,000 machine hours.At this level of activity, the following manufacturing overhead costs are expected: $$\begin{array} { l r }
\text { Indirect labor } & \$ 720,000 \
\text { Machine supplies } & 180,000 \
\text { Indirect materials } & 210,000 \
\text { Depreciation on factory building } & 150,000 \
\text { Total manufacturing overhead } & \$ 1,260,000
\end{array}$$ A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of
A)$1,482,000.
B)$1,260,000.
C)$1,512,000.
D)$1,362,000.

Question

The master budget of Windy Co.shows that the planned activity level for next year is expected to be 50,000 machine hours.At this level of activity, the following manufacturing overhead costs are expected: $$\begin{array} { l r } 
\text { Indirect labor } & \$ 720,000 \
\text { Machine supplies } & 180,000 \
\text { Indirect materials } & 210,000 \
\text { Depreciation on factory building } & 150,000 \
\text { Total manufacturing overhead } & \$ 1,260,000
\end{array}$$ A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of
A)$1,482,000.
B)$1,260,000.
C)$1,512,000.
D)$1,362,000.

Quizplus · Accepted Answer

The correct answer is A.The flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of $1,482,000. This is because the variable manufacturing overhead costs (indirect labor, machine supplies, and indirect materials) will increase with the increase in activity level, while the fixed manufacturing overhead costs (depreciation on factory building) will remain the same.

The Master Budget of Windy Co A Flexible Budget for a Level of Activity of 60,000