(Calculation offlexible budget) The monthly overhead cost formula for Issac Cor poration is currently estimated as $36,000...
Question:
(Calculation offlexible budget) The monthly overhead cost formula for Issac Cor¬ poration is currently estimated as $36,000 T $42X, where X represents machine hours. Company management believes operations will expand into a new relevant range in the upcoming year. Fixed costs are expected to rise to $54,000 for any activity level above 5,000 machine hours, and the variable cost rate is expected to drop at 6,000 machine hours by $6 per machine hour due to volume purchasing.
a. Prepare a flexible budget for the 4,500, 5,500, and 6,500 machine hour levels.
b. Calculate total overhead costs per machine hour at each level.
c. If each unit of product requires 2 machine hours, compute the cost per unit if production is set at 4,000 units.
LO1
Step by Step Answer:
Cost Accounting Traditions And Innovations
ISBN: 9780538880473
3rd Edition
Authors: Jesse T. Barfield, Cecily A. Raiborn, Michael R. Kinney