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Question - The cost formulas of a manufacturing overhead costs are given below. The costs cover a range of 8,000 to 10,000 machine-hours.
Overhead costs include:
Supplies $0.20 per machine hour
Indirect labor $5,000 plus $0.25 per machine hour
Utilities $0.10 per machine hour
Maintenance $7,000 plus $0.10 per machine hour
Depreciation $8,000
Prepare a flexible budget in increments of 1,000 machine hours. Include all costs in your flexible budget and the calculations needed for all numbers.
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Identify a cost driver and explain why it is an appropriate choice.
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