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Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity level 3,100 machine-hours...

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity level 3,100 machine-hours Variable overhead costs: Supplies $ 15,810 Indirect labor 27,900 Fixed overhead costs: Supervision 17,000 Utilities 6,500 Depreciation 7,500 Total overhead cost $ 74,710 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 3,000 machine-hours rather than 3,100 machine-hours? Multiple Choice $72,650 $72,300 $73,300 $74,710

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Expert Solution

The correct answer is $73,300 which is calculated as below:-
Variable overhead cost per 3,100 machine hours
Supplies          15,810            3,100       5.10 Per machine hours
Indirect labor          27,900            3,100       9.00 Per machine hours
Hence, variable overhead cost for 3,000 machine hours
Supplies              5.10            3,000 15,300
Indirect labor              9.00            3,000 27,000
Total variable overhead cost 42,300
Add : Fixed cost
Supervision          17,000
utilities            6,500
Depreciation            7,500 31,000
Total budgeted overhead cost 73,300

ekkarill92 answered 1 year ago
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