Stitt Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During November, the company budgeted for 5,900 units, but its actual level of activity was 5,880 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting: Actual results for November: The manufacturing overhead in the flexible budget for November would be closest to:
A)$57,620
B)$56,056
C)$58,013
D)$56,080

Question

Stitt Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During November, the company budgeted for 5,900 units, but its actual level of activity was 5,880 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for November: Data used in budgeting:  Actual results for November:  The manufacturing overhead in the flexible budget for November would be closest to:
A)$57,620 
B)$56,056 
C)$58,013 
D)$56,080

Quizplus · Accepted Answer

The manufacturing overhead in the flexible budget is calculated using the formula:

Budgeted variable overhead + Budgeted fixed overhead

For November, the budgeted variable overhead was $2.20 per unit, and the budgeted fixed overhead was $47,860.

Using the actual level of activity of 5,880 units, the flexible budget for manufacturing overhead would be:

($2.20 × 5,880) + $47,860 = $56,056

Therefore, the closest answer choice is B, $56,056.

Stitt Corporation Manufactures and Sells a Single Product