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: $\begin{array}{lrlr}\text { Variable }&&\text { Fixed }\
\hline \text { Indirect materials } & \$ 140,000 & \text { Depreciation } & \$ 60,000 \
\text { Indirect labor } & 200,000 & \text { Taxes } & 10,000 \
\text { Factory supplies } & 20,000 & \text { Supervision } & 50,000
\end{array}$ A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs of
A) $270000.
B) $360000.
C) $370000.
D) $300000.

Question

Quizplus · Accepted Answer

The flexible budget adjusts variable costs based on the actual activity level. At 90,000 machine hours, variable costs are 90% of the budgeted level (90,000/100,000). Variable costs: ($140,000 + $200,000 + $20,000) * 0.9 = $324,000. Fixed costs remain the same at $120,000. Total costs = $324,000 + $120,000 = $444,000.

A Company's Planned Activity Level for Next Year Is Expected