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M Company derived the following cost equation to explain its monthly manufacturing overhead cost:
OH = $80,000 + $12MH, where MH = machine hours
Question 1: The expected time required to manufacture one unit is 4 machine hours. The company applies manufacturing overhead to production on the basis of machine hours and its normal annual production is 50,000 units. What is the estimated variable manufacturing overhead cost for a month in which scheduled production is 5,000 units?
Option a. $360,000
Option b. $320,000
Option c. $240,000
Option d. $80,000
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