Eberley Corporation's cost formula for its manufacturing overhead is $25,700 per month plus $10 per machine-hour. For the month of July, the company planned for activity of 5,900 machine-hours, but the actual level of activity was 5,920 machine-hours. The actual manufacturing overhead for the month was $86,800. The manufacturing overhead in the flexible budget for July would be closest to:
A)$84,900
B)$84,700
C)$84,987
D)$86,800

Question

Quizplus · Accepted Answer

The flexible budget for July would be $25,700 (fixed overhead) + (5,900 machine-hours x $10 variable overhead rate) = $84,900.

Eberley Corporation's Cost Formula for Its Manufacturing Overhead Is $25,700