Which of the following mathematical expressions is found in a typical flexible-budget formula for overhead?
A) Total activity units + budgeted fixed overhead cost per unit.
B) Budgeted variable overhead cost per unit + budgeted fixed overhead cost.
C) (Budgeted variable overhead cost per unit × total activity units) + budgeted fixed overhead costs.
D) (Budgeted fixed overhead cost per unit × total activity units) + (budgeted variable overhead cost per unit × total activity units).
E) None of the other answers are correct.

Question

Quizplus · Accepted Answer

The typical flexible-budget formula for overhead includes the variable overhead costs, which vary based on the level of activity, as well as the fixed overhead costs. Option A only includes the fixed overhead cost per unit, while option B only includes the variable and fixed overhead costs, without considering the total activity units. Option D includes both the fixed and variable overhead costs, but multiplies them separately by the total activity units, rather than combining them in a single formula. Option C, on the other hand, correctly multiplies the budgeted variable overhead cost per unit by the total activity units and then adds the budgeted fixed overhead costs. This is the most comprehensive and accurate expression for a flexible-budget formula for overhead.

Which of the Following Mathematical Expressions Is Found in a Typical