Hatzenbuhler Manufacturing Corporation has prepared the following overhead budget for next month.
Activity level 6,500 machine-hours
Variable overhead costs:
Indirect labor 53,350
Fixed overhead costs:
Total overhead cost 110,200
The company's variable overhead costs are driven by machine-hours.
What would be the total budgeted overhead cost for next month if the activity level is 6,200 machine-hours rather than 6,500 machine-hours? Assume that the activity levels of 6,500 machine-hours and 6,200 machine-hours are within the same relevant range.
The solution explains the calculated of budgeted overhead cost.