Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. The company's variable overhead costs are driven by machine-hours.
What would be the total budgeted overhead cost for next month if the activity level is 2,400 machine-hours rather than 2,500 machine-hours?

Question

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month.  The company's variable overhead costs are driven by machine-hours.
What would be the total budgeted overhead cost for next month if the activity level is 2,400 machine-hours rather than 2,500 machine-hours?

Quizplus · Accepted Answer

Variable cost per MH for supplies = $12,250 ÷ 2,500 MHs = $4.90 per MH
Variable cost per MH for indirect labor = $22,000 ÷ 2,500 MHs = $8.80 per MH
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Kerekes Manufacturing Corporation Has Prepared the Following Overhead Budget for Next