The following costs appear in Malgorzata Company's flexible budget at an activity level of 15,000 machine-hours:
Indirect materials: $7,800
Factory rent: $18,000
What would be the flexible budget amounts at an activity level of 12,000 machine hours if indirect material is a variable cost and factory rent a fixed cost?
$\begin{array}{|l|r|}
\hline \text { Indirect materials } & \text { Factory rent } \
\hline \text { A) } \$ 7,800 & \$ 14,400 \
\hline \text { B) } 7,800 & 18,000 \
\hline \text { C) } 6,240 & 14,400 \
\hline \text { D) } 6,240 & 18,000 \
\hline
\end{array}$

Question

Quizplus · Accepted Answer

Indirect materials cost varies with machine hours, so it decreases proportionally when activity level decreases. Factory rent is fixed and remains the same regardless of machine hours.

The Following Costs Appear in Malgorzata Company's Flexible Budget at an Activity