Multiple Choice Question 74 Vaughn Manufacturing prepared a

Multiple Choice Question 74

Vaughn Manufacturing prepared a fixed budget of 80000 direct labor hours, with estimated overhead costs of $400000 for variable overhead and $90000 for fixed overhead. Vaughn then prepared a flexible budget at 76000 labor hours. How much is total overhead costs at this level of activity?

Solution

D. $470,000

Total overhead costs at this level of activity = [($400,000 / 80,000) * 76,000] + $90,000

Total overhead costs at this level of activity = $470,000