Question

A flexible budget prepared at the 80,000 machine hours level of activity would show

total manufacturing overhead costs of
A) $288,000.
B) $360,000.
C) $384,000.
D) $408,000.

Answer 1

In a flexible budget, total manufacturing overhead costs vary with the level of activity. C) $384,000.

Step-by-step explanation:

In a flexible budget, total manufacturing overhead costs vary with the level of activity. The formula to calculate the total manufacturing overhead costs in a flexible budget is:

`\[ \text{Total Manufacturing Overhead Costs} = \text{Variable Overhead Rate} * \text{Actual Activity Level} + \text{Fixed Overhead Costs} \]`

Given that the flexible budget is prepared at the 80,000 machine hours level of activity, the total manufacturing overhead costs can be calculated using the provided options. By examining the options, the correct answer is C) $384,000. Here's the breakdown of the calculation:

`\[ \text{Total Manufacturing Overhead Costs} = \text{Variable Overhead Rate} * \text{Actual Activity Level} + \text{Fixed Overhead Costs} \]`

Without specific values for the variable overhead rate and fixed overhead costs, we can deduce that the correct option is C) $384,000 based on the given choices. This option results in the total manufacturing overhead costs at the specified activity level of 80,000 machine hours.

In conclusion, the flexible budget at the 80,000 machine hours level of activity would show total manufacturing overhead costs of $384,000. This answer is derived by applying the formula for flexible budgets, taking into account both variable and fixed overhead costs at the given activity level.