Poulsen Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,300 units, but its actual level of activity was 7,270 units. The company has provided the following data concerning the formulas to be used in its budgeting:
-The manufacturing overhead in the flexible budget for July would be closest to:
A) $47,190
B) $47,151
C) $45,344
D) $45,719

Question

Poulsen Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During July, the company budgeted for 7,300 units, but its actual level of activity was 7,270 units. The company has provided the following data concerning the formulas to be used in its budgeting: 
-The manufacturing overhead in the flexible budget for July would be closest to:
A) $47,190 
B) $47,151 
C) $45,344 
D) $45,719

Quizplus · Accepted Answer

The flexible budget formula for manufacturing overhead is:
Total Manufacturing Overhead = $17,200 + ($1.40 × DLH)

Using the actual activity level of 7,270 units, the flexible budget for manufacturing overhead would be:
Total Manufacturing Overhead = $17,200 + ($1.40 × 7,270 DLH)
Total Manufacturing Overhead = $17,200 + $10,178
Total Manufacturing Overhead = $27,378

Therefore, the closest option is B) $47,151.

Poulsen Corporation Manufactures and Sells a Single Product