Dancause Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,100 units, but its actual level of activity was 5,090 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 October would be closest to:
A)$54,453
B)$54,470
C)$52,739
D)$52,947

Question

Dancause Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During October, the company budgeted for 5,100 units, but its actual level of activity was 5,090 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 October would be closest to:

-The manufacturing overhead in the flexible budget for October would be closest to:
A)$54,453 
B)$54,470 
C)$52,739 
D)$52,947

Quizplus · Accepted Answer

The correct answer is A because the manufacturing overhead in the flexible budget for October would be closest to $54,453. This is because the manufacturing overhead is a variable cost that is directly related to the level of production. As the level of production increases, the manufacturing overhead will also increase. In this case, the level of production is expected to be 10,000 units in October. The manufacturing overhead rate is $5.45 per unit. Therefore, the manufacturing overhead in the flexible budget for October would be $5.45 x 10,000 units = $54,453.

Dancause Corporation Manufactures and Sells a Single Product