Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

What is the flexible-budget amount for variable manufacturing overhead?

Question

Lancelot Corporation manufactures tennis gear and uses budgeted machine-hours to allocate variable manufacturing overhead. The following information relates to the company's manufacturing overhead data:

What is the flexible-budget amount for variable manufacturing overhead?

Quizplus · Accepted Answer

Budgeted machine hours per unit = 24,000 ÷ 8,000 = 3
Budgeted machine hours allowed for 8,500 units = 8,500 × 3 = 25,500
Budgeted variable overhead rate per machine hour = $288,000 ÷ 24,000 = $12.00
Flexible-budget amount = 25,500 × $12.00 = $306,000

Lancelot Corporation Manufactures Tennis Gear and Uses Budgeted Machine-Hours to Allocate