Jennings Manufacturing gathered the following flexible budget information: How much is the total budgeted overhead cost at 90% of normal capacity?

Question

Jennings Manufacturing gathered the following flexible budget information:  How much is the total budgeted overhead cost at 90% of normal capacity?

Quizplus · Accepted Answer

According to the flexible budget information provided, the total budgeted overhead cost at 100% capacity is $240,000. To calculate the total budgeted overhead cost at 90% capacity, we need to use the formula:

Total Budgeted Overhead Cost at 90% Capacity = Total Budgeted Overhead Cost at 100% Capacity * (90% / 100%)

Plugging in the values, we get:

Total Budgeted Overhead Cost at 90% Capacity = $240,000 * (90% / 100%)
                                             = $240,000 * 0.9
                                             = $216,000

Therefore, the best choice is C ($217,000), as it is the closest option to the calculated value.

Jennings Manufacturing Gathered the Following Flexible Budget Information: How