A company's planned activity level for next year is expected to be 100000 machine hours. At this level of activity the company budgeted the following manufacturing overhead costs: Variable Fixed Indirect materials $ 140 , 000 Depreciation $ 60 , 000 Indirect labor 200 , 000 Taxes 10 , 000 Factory supplies 20 , 000 Supervision 50 , 000 \begin{array}{lrlr} ext { Variable } & & ext { Fixed }\\hline ext { Indirect materials } & \$ 140,000 & ext { Depreciation } & \$ 60,000 \ ext { Indirect labor } & 200,000 & ext { Taxes } & 10,000 \ ext { Factory supplies } & 20,000 & ext { Supervision } & 50,000\end{array} Variable Indirect materials Indirect labor Factory supplies $140 , 000 200 , 000 20 , 000 Fixed Depreciation Taxes Supervision $60 , 000 10 , 000 50 , 000 A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs ofA) $270000.B) $360000.C) $370000.D) $300000.

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A company's planned activity level for next year is expected to be 100000 machine hours. At this level of activity the company budgeted the following manufacturing overhead costs:    Variable   Fixed   Indirect materials  $ 140 , 000  Depreciation  $ 60 , 000  Indirect labor  200 , 000  Taxes  10 , 000  Factory supplies  20 , 000  Supervision  50 , 000 \begin{array}{lrlr}	ext { Variable } & & 	ext { Fixed }\\hline 	ext { Indirect materials }  &  \$ 140,000  &  	ext { Depreciation }  &  \$ 60,000 \	ext { Indirect labor }  &  200,000  &  	ext { Taxes }  &  10,000 \	ext { Factory supplies }  &  20,000  &  	ext { Supervision }  &  50,000\end{array}  Variable   Indirect materials   Indirect labor   Factory supplies  ​ $140 , 000 200 , 000 20 , 000 ​  Fixed   Depreciation   Taxes   Supervision  ​ $60 , 000 10 , 000 50 , 000 ​ ​   A flexible budget prepared at the 90000 machine hours level of activity would show total manufacturing overhead costs ofA)  $270000.B)  $360000.C)  $370000.D)  $300000.

Arvind Mithran · Accepted Answer

Final Answer : C, Explanation :  The flexible budget adjusts variable costs based on the actual activity level. At 90,000 machine hours, variable costs are 90% of the budgeted level (90,000/100,000). Variable costs: ($140,000 + $200,000 + $20,000) * 0.9 = $324,000. Fixed costs remain the same at $120,000. Total costs = $324,000 + $120,000 = $444,000.

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