Kerekes Manufacturing Corporation has prepared the following overhead budget for

Question

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month.

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 2,500 machine-hours rather than 2,600 machine-hours?

Activity level 2,600 machine- hours Variable overhead costs: Supplie:s Indirect labor $11,960 22,100 Fixed overhead costs: Supervision Utilities Depreciation 15,600 6,800 7,000 $62,660 Total overhead cost

Explanation / Answer

Variable Overhead Costs:

ACTIVITY LEVEL 2,500 machine-hours

Variable Overhead Costs:

Supplies $ 11,500 Indirect Labour $ 21,250 Fixed Overhead Costs: Supervision $ 15,000 Utilities $ 5,769 Depreciation $ 6,731 Total Overhead Cost $60,250

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