A ﬂexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and ﬁxed manufacturing overhead of $120,000.The budget for 20,000 hours would reveal total overhead costs of:
A)$240,000.
B)$270,000.
C)$290,000.
D)$350,000.
E)$210,000.

Question

Quizplus · Accepted Answer

The total overhead cost is the sum of variable and fixed overhead costs. The variable overhead cost is $90,000 and the fixed overhead cost is $120,000. Therefore, the total overhead cost for 15,000 hours is $90,000 + $120,000 = $210,000. The variable overhead cost per hour is $90,000 / 15,000 hours = $6.00 per hour. The fixed overhead cost per hour is $120,000 / 15,000 hours = $8.00 per hour. Therefore, the total overhead cost for 20,000 hours is (20,000 hours * $6.00 per hour) + (20,000 hours * $8.00 per hour) = $240,000.

A ﬂExible Budget for 15,000 Hours Revealed Variable Manufacturing Overhead