Delicious Treats (DT) anticipated that 94,000 process hours would be worked duri

Question

Delicious Treats (DT) anticipated that 94,000 process hours would be worked during an upcoming accounting period when, in fact, 102,000 hours were actually worked. One of the company's overhead cost formula is expressed as follows:
Y = $18PH + $740,000 where PH is defined as process hours
What budgeted dollar amount would appear in DT's static budget and flexible budget for the preceding cost formula?
   

Choice A

Choice B

Choice C

Choice D

Choice E

A flexible budget for 12,000 hours revealed variable manufacturing overhead of $86,000 and fixed manufacturing overhead of $122,000. The budget for 27,000 hours would reveal total overhead costs of:

$208,000.

$315,500.

$360,500.

$468,000.

None of these.

A flexible budget for 30,000 hours revealed variable manufacturing overhead of $102,000 and fixed manufacturing overhead of $138,000. The budget for 43,000 hours would reveal total overhead costs of (Do not round your intermediate calculations. Round your final answers to the nearest dollar.):

$284,200.

$394,800.

$385,800.

$342,800.

$240,000.

Static Flexible A. $2,432,000       $2,432,000       B. $2,432,000       $2,576,000       C. $2,576,000       $2,432,000       D. $2,576,000       $2,576,000       E. None of the above.

Explanation / Answer

1) Static budget cost = (94000*18+740000) = 2432000

Flexible budget = (102000*18+740000) = 2576000

so answer is b)

2) Total overhead on 27000 hour :

Total overhead = (86000/12000*27000)+122000 = 315500

so answer is b) $315500

3) Overhead on 43000 hour = (102000/30000*430000)+138000 = 284200

so answer is a) $284200

Static Flexible b 2432000 2576000

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