Wooster has the following budgeted costs at its anticipated production level (ex
ID: 2540082 • Letter: W
Question
Wooster has the following budgeted costs at its anticipated production level (expressed in hours): variable overhead, $169,800; fixed overhead, $312,000. If Wooster now revises its anticipated production slightly upward, it would expect:
Multiple Choice
total fixed overhead of $312,000 and a lower hourly rate for variable overhead.
total fixed overhead of $312,000 and the same hourly rate for variable overhead.
total fixed overhead of $312,000 and a higher hourly rate for variable overhead.
total variable overhead of less than $169,800 and a lower hourly rate for variable overhead.
total variable overhead of less than $169,800 and a higher hourly rate for variable overhead.
Explanation / Answer
The correct option is B.
Total fixed cost and variable cost/unit do not change with change in units.
Hence total fixed cost would be =$312000 while total variable cost would increase giving the same hourly rate for variable overhead.
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