When preparing the flexible budget for factory overhead,variable costs may include all but the following:

Question

Quizplus · Accepted Answer

Variable costs are costs that vary directly with the level of production or activity. Costs such as shop supplies, electricity to run the machines, and repair costs are directly related to the level of production activity and hence are variable costs. Insurance, on the other hand, is a fixed cost that remains the same regardless of the level of production activity. Therefore, choice A is not a variable cost and should not be included in the flexible budget for factory overhead.

When Preparing the Flexible Budget for Factory Overhead,variable Costs May