Question

Wiki Wiki Company has determined that the variable overhead rate is $4.50 per direct labor hour in the Fabrication Department. The normal production capacity for the Fabrication Department is 10,000 hours for the month. Fixed costs are budgeted at $60,000 for the month. a. Prepare a monthly factory overhead flexible budget for 9,000, 10,000, and 11,000 hours of production. Enter all amounts as positive numbers.

Answer 1

Monthly factory overhead flexible budget

9000 HRS 10000 HRS 11000 HRS

Variable Overhead 40,500 45,000 49,500

Fixed Overheads 60,000 60,000 60,000

Total Overhead Costs 100,000 105,000 109,500

Step-by-step explanation:

Fixed Costs do not change with the level of activity and thus remain the same for activity of 9,000 : 10,000 and 11,000 hours whilst variable overheads vary with the level of activity.