Kerekes Manufacturing Corporation has prepared the following overhead budget for

Question

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity level 3,700 machine- hours Variable overhead costs: Supplie:s Indirect labor $21,090 35,520 Fixed overhead costs: Supervision Utilities Depreciation 18,100 7,100 8,100 $89,910 Total overhead cost 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 3,600 machine-hours rather than 3,700 machine-hours?

Explanation / Answer

Calculate overhead cost :

Activity level 3600 Mh Variable overhead cost Supplies (21090/3700*3600) 20520 Indirect labour (35520/3700*3600) 34560 Fixed overhead cost Supervision 18100 Utilities 7100 Depreciation 8100 Total overhead cost 88380

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