Trip Manufacturing Company prepared a static budget of 40,000 direct labor hours

Question

Trip Manufacturing Company prepared a static budget of 40,000 direct labor hours, with estimated overhead cost of $200,000 for variable overhead and $60,000 for fixed overhead. Trip then prepared a flexible budget at 38,000 labor hours. How much is total overhead cost at this level of activity Question 37 options: $247000 $250000 $260000 $190000 Trip Manufacturing Company prepared a static budget of 40,000 direct labor hours, with estimated overhead cost of $200,000 for variable overhead and $60,000 for fixed overhead. Trip then prepared a flexible budget at 38,000 labor hours. How much is total overhead cost at this level of activity Trip Manufacturing Company prepared a static budget of 40,000 direct labor hours, with estimated overhead cost of $200,000 for variable overhead and $60,000 for fixed overhead. Trip then prepared a flexible budget at 38,000 labor hours. How much is total overhead cost at this level of activity $247000 $250000 $260000 $190000 $247000 $250000 $260000 $190000 $247000 $250000 $260000 $190000

Explanation / Answer

Hi,

Please find the answer as follows:

Total Overhead = Variable Overhead + Fixed Overhead

Variable Overhead = 200000/40000*38000 = 190000

Fixed Overhead (Remains Constant) = 60000

Total Overhead = 190000 + 60000 = 250000

Option B (250000) is correct.

Thanks.

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