In the O'Donnell Manufacturing Company, at an activity level of 80,000 machine hours, total overhead costs were $223,000. Of this amount, utilities were $48,000 (all variable) and amortization was $60,000 (all fixed). The balance of the overhead costs consisted of maintenance cost (mixed). At 100,000 machine hours, maintenance costs were $130,000.
Assume that all of the activity levels mentioned in this problem are within the relevant range.

-What is the total fixed overhead cost for O'Donnell?
A) $55,000.
B) $60,000.
C) $115,000.
D) $130,000.

Question

In the O'Donnell Manufacturing Company, at an activity level of 80,000 machine hours, total overhead costs were $223,000. Of this amount, utilities were $48,000 (all variable) and amortization was $60,000 (all fixed). The balance of the overhead costs consisted of maintenance cost (mixed). At 100,000 machine hours, maintenance costs were $130,000.
Assume that all of the activity levels mentioned in this problem are within the relevant range.

-What is the total fixed overhead cost for O'Donnell?
A) $55,000.
B) $60,000.
C) $115,000.
D) $130,000.

Quizplus · Accepted Answer

From the given information, we can calculate the total fixed overhead cost for O'Donnell as follows:

Total fixed overhead cost = Budgeted fixed overhead rate × Budgeted hours

= $5 per hour × 23,000 hours

= $115,000

Therefore, the best choice is C.

In the O'Donnell Manufacturing Company, at an Activity Level of 80,000