The head of finance for Squish Corporation wants to know the expected manufacturing variable overhead cost for the third quarter of this year. In the second quarter, the company reported the manufacturing of 7,000 units and a total variable manufacturing overhead of $56,000. In addition to this, the production department has provided him the details below:
On the basis of the data above, what will the total variable manufacturing overhead cost of the third quarter of the year be?
A) $3,600
B) $11,000
C) $11,280
D) $56,000

Question

The head of finance for Squish Corporation wants to know the expected manufacturing variable overhead cost for the third quarter of this year. In the second quarter, the company reported the manufacturing of 7,000 units and a total variable manufacturing overhead of $56,000. In addition to this, the production department has provided him the details below:
 On the basis of the data above, what will the total variable manufacturing overhead cost of the third quarter of the year be?
A) $3,600 
B) $11,000 
C) $11,280 
D) $56,000

Quizplus · Accepted Answer

Variable Manufacturing Overhead rate per Unit = Total Manufacturing Overhead Cost/Number of Units Produced = $56,000/7,000 = $8 per Unit
Budgeted Variable Manufacturing Overhead Cost = Budgeted Number of Units to be Produced × Variable Manufacturing Overhead cost per Unit
July: Budgeted Variable Manufacturing Overhead Cost = 450 × $8 = $3,600
August: Budgeted Variable Manufacturing Overhead Cost = 470 × $8 = $3,760
September: Budgeted Variable Manufacturing Overhead Cost = 490 × $8 = $3,920
Total Variable Manufacturing Overhead Cost = $11,280.

The Head of Finance for Squish Corporation Wants to Know