Question

A flexible budget for 15,000 hours revealed variable manufacturing overhead of $90,000 and fixed manufacturing overhead of $120,000. The budget for 25,000 hours would reveal total overhead costs of:_________.
A. $210,000.
B. $270,000.
C. $290,000.
D. $350,000.
E. some other amount.

Answer 1

Answer:

B. $270,000.

Explanation:

The computation of the total overhead cost is shown below:

But before that first we have to find out the variable overhead per hour which is

= $90,000 ÷ 15,000

= $6 per hour

Now

Variable overhead for 25,000 hours is

= $6 per hour × 25,000

= $150,000

So,

Total overhead cost is  

= Variable overhead for 25,000 hours + Fixed overhead cost

= $150,000 + $120,000

= $270,000

hence, the correct option is B. $270,000