A Company Is Preparing Its' Budgets for the Upcoming Year

question 48

Multiple Choice

A company is preparing its' budgets for the upcoming year. Current direct materials cost is $150,000 and current direct manufacturing labour is $1,000,000, both of which are expected to increase by 4% next year. Overhead costs for the year just ending are: variable $18,000, and fixed $30,000. The firm expects to achieve a 2% cost reduction in overhead costs by continuous improvement. What is the company's expected cost for the upcoming year, if production is the same number of units as the current year?

• A) $1,175,000
• B) $1,176,920
• C) $1,196,920
• D) $1,243,040
• E) $1,263,040

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