Brown, Inc., has budgeted £60,000 for annual fixed overhead costs for the coming year. Budgeted variable overhead is £0.10 per unit. For the next quarter, Brown plans to manufacture 500,000 units. Brown's budgeted overhead for the quarter is
A)£50,000.
B)£65,000.
C)£110,000.
D)£150,000.

Question

Quizplus · Accepted Answer

The budgeted overhead for the quarter includes both fixed and variable components. The fixed overhead is £60,000 annually, so for one quarter, it's £60,000 / 4 = £15,000. The variable overhead is £0.10 per unit for 500,000 units, which equals £50,000. Adding these together gives £15,000 + £50,000 = £65,000.