Sullivan Company
Sullivan Company is preparing its Manufacturing Overhead budget for the second quarter of the year.Budgeted variable factory overhead is $3.00 per unit produced;budgeted fixed factory overhead is $75,000 per month,with $16,000 of this amount being factory depreciation.
Refer to Sullivan Company.If the budgeted cash disbursements for factory overhead for June are $80,000,then the budgeted production for June must be:

Question

Quizplus · Accepted Answer

We can use the formula below to calculate the budgeted production for June:

Budgeted variable factory overhead + Budgeted fixed factory overhead = Budgeted total factory overhead

For June, we know that the budgeted total factory overhead is $80,000, and we can break it down into its variable and fixed components:

Budgeted total factory overhead = Budgeted variable factory overhead + Budgeted fixed factory overhead
$80,000 = ($3.00 per unit)Q + $75,000 - $16,000  ($16,000 is factory depreciation)

Simplifying and solving for Q (the budgeted production for June):

$80,000 - $75,000 + $16,000 = ($3.00 per unit)Q
$21,000 = ($3.00 per unit)Q
Q = 7,000 units

Therefore, the answer is D) 7,000 units.

Sullivan Company Sullivan Company Is Preparing Its Manufacturing Overhead Budget for the for the Second