Question

In the Sheridan Company, indirect labor is budgeted for $135000 and factory supervision is budgeted for $36000 at normal capacity of 200000 direct labor hours. If 180000 direct labor hours are worked, flexible budget total for these costs is: $148500. $157500. $153900. $171000.

Answer 1

$153,900

Step-by-step explanation:

With regards to the above, we need to first calculate the overhead per hour

Overhead cost per hour = ($135,000 + $36,000)/200,000 = $0.855

Now, we can calculate the total cost of 180,000 hours

Overhead cost = 180,000 × $0.855

Overhead cost = $153,900

Therefore, flexible budget for these total cost is $153,900