The following costs appear in a company's flexible budget at an activity level of 15,000 machine...
The following costs appear in a company's flexible budget at an activity level of 15,000 machine hours:
Indirect materials $7800
Factory rent $18,000
What would be the flexible budget amounts at an activity level of 12,000 machine hours if indirect material is a variable cost and factory rent a fixed cost and actual factory rent is $22,000?
A. $7800 for indirect labour and $14,400 for factory rent
B. $7800 for indirect labour and $18,000 for factory rent
C. $6240 for indirect labour and $14,400 for factory rent
D. $6240 for indirect labour and $18,000 for factory rent
E. $6240 for indirect labour and $22,000 for factory rent
Choose one of the following:
A) Option A
B) Option B
C) Option C
D) Option D
E) Option E
Homework Answers
Variable cost Per MH =total indirect material / Machine Hours = 7800 / 15000=0.52
Indirect material 12000 hours= 12000*0.52= $ 6,240
Factory rent at 12000 MH = $ 18,000
flexible Budget cost at 12000 MachineHours
Option D) $ 6,240 for Indirect Labour and $ 18,000 For Factory Rent (Answer)
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