A Company's Planned Activity Level for Next Year Is Expected

question 99

Multiple Choice

A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs: A flexible budget prepared at the 80,000 machine hours level of activity would show total manufacturing overhead costs of

• A) $288,000.
• B) $360,000.
• C) $384,000.
• D) $408,000.

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Definitions:

Sales Dollars

The total revenue a company generates from sales activities before any expenses are deducted.

Common Fixed Expenses

Expenses that do not change with the level of production or sales and are shared by different segments or products of a company.

Manufacturing Overhead

All indirect costs associated with manufacturing, including but not limited to utility costs, depreciation, and salaries of maintenance personnel.

Variable

An element, feature, or factor that is liable to vary or change.