The gears department of Cycle Company has budgeted monthly manufacturing overhead cost of $40,000 plus $5 per direct labour hour. The flexible budget report reflects $120,000 for total budgeted manufacturing cost for the month. What is the actual level of activity achieved during the month?

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The actual level of activity achieved during the month is 16,000 direct labour hours.The flexible budget report reflects $120,000 for total budgeted manufacturing cost for the month. This includes the budgeted monthly manufacturing overhead cost of $40,000 plus $5 per direct labour hour.Therefore, the actual level of activity achieved during the month can be calculated as follows:Actual level of activity = (Total budgeted manufacturing cost - Budgeted monthly manufacturing overhead cost) / Budgeted variable manufacturing overhead cost per unit= ($120,000 - $40,000) / $5= 16,000 direct labour hours

The Gears Department of Cycle Company Has Budgeted Monthly Manufacturing