Question

The master budget of Vaughn Manufacturing shows that the planned activity level for next year is expected to be 50000 machine hours. At this level of activity, the following manufacturing overhead costs are expected:

Indirect labor $810000
Machine supplies 130000
Indirect materials 300000
Depreciation on factory building 140000
Total manufacturing overhead
$1380000

A flexible budget for a level of activity of 60000 machine hours would show total manufacturing overhead costs of
Entry field with correct answer
$1628000.
$1656000.
$1516000.
$1380000.

Answer 1

Answer:

$1,628,000

Explanation:

The computation of the total manufacturing overhead costs is shown below:

= (Indirect labor + machine supplies + Indirect materials) ÷ planned activity level × flexible activity level + depreciation on factory building

= ($810,000 + $130,000 + $300,000) ÷ 50,000 machine hours × 60,000 machine hours + $140,000

= ($1,240,000) ÷ 50,000 machine hours × 60,000 machine hours + $140,000

= $1,488,000 + $140,000

= $1,628,000