Lehnertz Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 7,100 units, but its actual level of activity was 7,150 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for February:

Data used in budgeting:

Actual results for February:

-The manufacturing overhead in the flexible budget for February would be closest to:
A)$43,323
B)$42,520
C)$42,580
D)$42,719

Question

Lehnertz Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During February, the company budgeted for 7,100 units, but its actual level of activity was 7,150 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for February:

Data used in budgeting:

Actual results for February:

-The manufacturing overhead in the flexible budget for February would be closest to:

Data used in budgeting:

Actual results for February:

-The manufacturing overhead in the flexible budget for February would be closest to:
A)$43,323 
B)$42,520 
C)$42,580 
D)$42,719

Quizplus · Accepted Answer

To calculate the manufacturing overhead in the flexible budget for February, we need to use the predetermined overhead rate of $7 per direct labor hour and the actual number of direct labor hours worked in February, which is 6,083.

Manufacturing overhead in the flexible budget = Predetermined overhead rate x Actual direct labor hours 
Manufacturing overhead = $7 x 6,083 = $42,581

The closest answer choice is C.

Lehnertz Corporation Manufactures and Sells a Single Product