Reference no: EM132561262
The normal production activity level is assumed to be 100,000 units. Budgeted normal production activity level overheads are as follows:
Indirect materials $30,000
Factory Rent $30,000
Factory Manager's Salary $55,000
Maintenance of Machinery $10,000
Electricity $ 5,000
Depreciation - Machinery $ 7,000
Workers' Compensation Insurance $3,000
Insurance Machinery $ 900
Depreciation - Building $ 2,500
Additional Information
a) Indirect materials cost varies directly with production activity.
b) Maintenance of machinery is dependent upon hours worked by the machines (all units are uniform in terms of machine hours).
c) Electricity is a constant percentage of the total units produced.
d) Machinery is depreciated on a straight-line basis.
e) Workers compensation insurance is a percentage of direct labour and therefore varies directly with production activity.
Required:
Question 1: flexible manufacturing overhead budget showing budgeted overheads at 90%, 100% and 110% of the normal production activity level.