The Culver Company is preparing its Manufacturing Overhead Budget for the third quarter of the year. Budgeted variable factory overhead is $3.00 per unit produced; budgeted fixed factory overhead is $75,000 per month, with $16,000 of this amount being factory depreciation.
-If the budgeted production for August is 5,000 units, then the total budgeted factory overhead per unit is:

Question

Quizplus · Accepted Answer

The budgeted variable factory overhead per unit is $3.00.

The budgeted fixed factory overhead per month is $75,000, with $16,000 of this amount being factory depreciation. Therefore, the remaining fixed factory overhead is $75,000 - $16,000 = $59,000.

To calculate the total budgeted factory overhead per unit, we add the budgeted variable factory overhead per unit to the budgeted fixed factory overhead per unit:

Total budgeted factory overhead per unit = budgeted variable factory overhead per unit + (budgeted fixed factory overhead per month / budgeted units produced)
 
Total budgeted factory overhead per unit = $3.00 + ($59,000 / 5,000 units)
 
Total budgeted factory overhead per unit = $3.00 + $11.80
 
Total budgeted factory overhead per unit = $14.80

Therefore, the total budgeted factory overhead per unit is $14.80, which is closest to option B, $18.

The Culver Company Is Preparing Its Manufacturing Overhead Budget for the Third