a drive.google.com 3Sc is a manufacturing company whose sotal factory overhead c

Question

a drive.google.com 3Sc is a manufacturing company whose sotal factory overhead costs fuctuate somewhat from month to month according to the br machine-hours worked in its production facility. These costs for the last four months in 2015 are givem below Total factory overhead 6500 94,000 October November 92,000 The factory overhead costs above consist of indirect materials, rent, maintenance, and utilities The company has 5,000 machine-hours level of activity as follows Indirect materials (variable) Rent (fixed) Maintenance (mised) Utilites (mised Total factory overhead costs 3000 40,000 12,500 4o0 Pent 40p0O Assume that all dats are within the rolevant range, using the you would expect the company to incur at an operating level .00n Round to the nearest dellars 49,800 1.400 00000 4500 T Maintenence Utiries C. S D. S E. 96,350 None of the above 7000 4,00or (8.000)

Explanation / Answer

variable rate for indirect material = 3000/5000 = 0.6 per hours

semi variable exp = total - variable - fixed

Seggregating semi variable into variable and fixed

variable portion = change in cost / change in hours

= ( 53000-49000)/(10000-5000)

= 0.8 per hour

Fixed portion = 53000 - (10000*0.8) = 45000

Calculation of maintenance and utilities costs @ 8000 hours

variable portion = 8000*0.8 = 6400

fixed portion = 45000

Total M&U COST = 6400+45000 = 51400

ANSWER OPTION B

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