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: $$\begin{array} { l r }
\text { Indirect labor } & \$ 720,000 \
\text { Machine supplies } & 180,000 \
\text { Indirect materials } & 210,000 \
\text { Depreciation on factory building } & 150,000 \
\text { Total manufacturing overhead } & \$ 1260,000
\end{array}$$ A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of

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: $$\begin{array} { l r } 
\text { Indirect labor } & \$ 720,000 \
\text { Machine supplies } & 180,000 \
\text { Indirect materials } & 210,000 \
\text { Depreciation on factory building } & 150,000 \
\text { Total manufacturing overhead } & \$ 1260,000
\end{array}$$ A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of

Quizplus · Accepted Answer

The correct answer is A because the total manufacturing overhead costs are expected to increase by 20% from $1,260,000 to $1,482,000 when the activity level increases from 50,000 machine hours to 60,000 machine hours.

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