When Walston Corporation prepared its budget for 2017, it estimated fixed overhead of $540,000 ($45,000 per month) and variable overhead at $3.00 per unit produced.The company planned to produce 48,000 units during the year at a rate of 4,000 units each month.During April, the company produced 3,800 units and total overhead costs were $59,000.How much is the amount of overhead in the flexible budget for April's level of production?
A)$57,000
B)$45,000
C)$46,000
D)$56,400

Question

Quizplus · Accepted Answer

The flexible budget for April's level of production includes both fixed and variable overhead costs. The fixed overhead is $45,000 per month, as stated. The variable overhead is $3.00 per unit produced. For April, with 3,800 units produced, the variable overhead would be 3,800 units * $3.00/unit = $11,400. Adding the fixed overhead of $45,000 to the variable overhead of $11,400 gives a total of $56,400 for the flexible budget for April.

When Walston Corporation Prepared Its Budget for 2017, It Estimated