Bixley Company budgets variable manufacturing overhead at 50% of its direct labour costs.The company estimates that 20,000 direct labour hours will be used at an average rate of $11.50 per hour.Bixley's fixed manufacturing overhead costs are budgeted at $90,000 for the year.The company's budgeted manufacturing overhead for the year is
A)$320,000.
B)$230,000.
C)$205,000.
D)$115,000.

Question

Quizplus · Accepted Answer

First, we need to calculate the variable manufacturing overhead by multiplying the direct labour cost by 50%:

Variable manufacturing overhead = Direct labour cost x 50%
Variable manufacturing overhead = 20,000 hours x $11.50 x 50%
Variable manufacturing overhead = $115,000

Next, we add the fixed manufacturing overhead:

Total manufacturing overhead = Fixed manufacturing overhead + Variable manufacturing overhead
Total manufacturing overhead = $90,000 + $115,000
Total manufacturing overhead = $205,000

Therefore, the budgeted manufacturing overhead for the year is $205,000, which is option C.

Bixley Company Budgets Variable Manufacturing Overhead at 50% of Its