Pollitt Potato Packers Has a Flexible Budget for Manufacturing Overhead

question 75

Multiple Choice

Pollitt Potato Packers has a flexible budget for manufacturing overhead that is based on direct labour hours. The following overhead costs appear on the flexible budget at the 200,000-hour level of activity:
$\begin{array} { | l | r | } \hline \text { Variable overhead costs (total) : } & \\\hline \text { Packing supplies } & \$ 120,000 \\\hline \text { Indirect labour } & \$ 180,000 \\\hline \text { Fixed overhead costs (total) : } &\\\hline \text { Utilities } & \$ 100,000 \\\hline \text { Insurance } & \$ 40,000 \\\hline \text { Rent } & \$ 20,000\\\hline\end{array}$

-At an activity level of 180,000 direct labour hours,what amount would the flexible budget estimate for indirect labour cost?

• A) $108,000.
• B) $144,000.
• C) $162,000.
• D) $180,000.

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Definitions:

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Cost Recovery Deduction

A tax deduction that allows taxpayers to recover the cost of an asset over the time the asset is used, typically through depreciation.

Cost Recovery Deduction

A tax deduction that allows a taxpayer to recover the cost of property or assets over time through depreciation.