Barrick Company has established a flexible budget for manufacturing overhead based on direct labour-hours. Total budgeted costs at 200,000 direct labour-hours are as follows$\text { Variable costs (total): }$
$\begin{array}{ll}
\text { Packing supplies } & £ 120,000 \
\text { Indirect labour } & £ 180,000 \
\text { Fixed costs (total): } & \
\text { Utilities } & £ 100,000 \
\text { Rent } & £ 40,000 \
\text { Insurance } & £ 20,000
\end{array}$
-At an activity level of 170,000 direct labour-hours, the flexible budget for factory overhead would show the budgeted amount for utilities as

Question

Barrick Company has established a flexible budget for manufacturing overhead based on direct labour-hours. Total budgeted costs at 200,000 direct labour-hours are as follows$\text { Variable costs (total): }$
$\begin{array}{ll}
\text { Packing supplies } & £ 120,000 \
\text { Indirect labour } & £ 180,000 \
\text { Fixed costs (total): } & \
\text { Utilities } & £ 100,000 \
\text { Rent } & £ 40,000 \
\text { Insurance } & £ 20,000
\end{array}$ 
-At an activity level of 170,000 direct labour-hours, the flexible budget for factory overhead would show the budgeted amount for utilities as

Quizplus · Accepted Answer

Utilities are listed as a fixed cost, meaning they do not change with the level of production or direct labour-hours. Therefore, regardless of the activity level (whether it's 200,000 or 170,000 direct labour-hours), the budgeted amount for utilities remains the same at £100,000.

Barrick Company Has Established a Flexible Budget for Manufacturing Overhead Variable costs (total): \text { Variable costs (total): } Variable costs (total):

Barrick Company Has Established a Flexible Budget for Manufacturing Overhead $\text { Variable costs (total): }$