The master budget of Vaughn Manufacturing shows that the planned activity level

Question

The master budget of Vaughn Manufacturing shows that the planned activity level for next year is expected to be 50000 machine hours. At this level of activity, the following manufacturing overhead costs are expected: Indirect labor Machine supplies Indirect materials Depreciation on factory building Total manufacturing overhead $1380000 $810000 130000 300000 140000 A flexible budget for a level of activity of 60000 machine hours would show total manufacturing overhead costs of $1656000. $1628000 $1516000. $1380000

Explanation / Answer

Answer is $1628,000 Explanation: Variable Indirect cost for 50,000 MH Indirect labour 810000 Machine Supplies 130000 Indirect Material 300000 Total variable indirect cost 1,240,000 Number of Mh 50,000 Variable cost per MH 24.8 Total Overheads at 60,000 MH: Variable OH (60,000 Mh @$24.80) 1488000 Add: Fixed Oh 140,000 Total OH at 60,000 MH 1,628,000 Note: Depreciation is a fixed manufacturing OH.

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