Question

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 2,400 machine-hours rather than 2,500 machine-hours? Assume that the activity levels of 2,500 machine-hours and 2,400 machine-hours are within the same relevant range. Group of answer choices

Answer 1

$60,380

Step-by-step explanation:

Missing word "Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity Level - 2500 Machine Hours - Variable Overhead Cost: Supplies 12,250 Indirect Labor ---22,000 Fixed Overhead: Supervisor 15,500 Utilities -- 5500 Depreciation --- 6500 Total Cost --- 61,750"

So, at activity level of 2500

Total variable overhead cost = Supplies + Indirect labor

Total variable overhead cost = $12,250 + $22,000

Total variable overhead cost = $34,250

So, at activity level of 2400

Total variable overhead cost = $34,250 * 2,400/2,500

Total variable overhead cost = $34,250 * 0.96

Total variable overhead cost = $32,880

So, at 2,400 hours

Total overhead cost = Variable overhead cost + Fixed overhead cost

Total overhead cost = $32,880 + Supervisor salary + Utilities + Depreciation

Total overhead cost = $32,880 + $15,500 + $5,500 + $6,500

Total overhead cost = $60,380