Wiki Wiki Company has determined that the variable overhead rate is $4.50 per direct labor hour in the Fabrication Department. The normal production capacity for the Fabrication Department is 10,000 hours for the month. Fixed costs are budgeted at $60,000 for the month. a. Prepare a monthly factory overhead flexible budget for 9,000, 10,000, and 11,000 hours of production. Enter all amounts as positive numbers.

Monthly factory overhead flexible budget

                                          9000 HRS              10000 HRS              11000 HRS

Variable Overhead                40,500                  45,000                    49,500

Fixed Overheads                   60,000                  60,000                    60,000

Total Overhead Costs          100,000                 105,000                   109,500

Explanation:

Fixed Costs do not change with the level of activity and thus remain the same for activity of 9,000 : 10,000 and 11,000 hours whilst variable overheads vary with the level of activity.

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