Alright, let's calculate the total budgeted overhead cost for Kerekes Manufacturing Corporation for the next month if the activity level is 3,400 machine-hours instead of 3,500 machine-hours. We will break down the calculations into clear, organized steps to understand the process.
### Step 1: Calculate the variable overhead cost per machine-hour
We are given that the variable overhead costs are [tex]$19,250 for 3,500 machine-hours.
\[ \text{Variable overhead cost per machine-hour} = \frac{\$[/tex]19,250}{3,500 \text{ machine-hours}} = \[tex]$5.50 \text{ per machine-hour} \]
### Step 2: Calculate the total variable overhead cost for 3,400 machine-hours
Now that we have the cost per machine-hour, we can find the variable overhead for 3,400 machine-hours.
\[ \text{Total variable overhead cost for 3,400 machine-hours} = 3,400 \text{ machine-hours} \times \$[/tex]5.50 \text{ per machine-hour} = \[tex]$18,700 \]
### Step 3: Sum up the fixed overhead costs
The fixed overhead costs do not change with the activity level. Therefore, we directly sum the given fixed overhead components:
- Supervision: \$[/tex]6,900
- Utilities: \[tex]$7,900
- Depreciation: \$[/tex]83,650
[tex]\[ \text{Total fixed overhead costs} = \$6,900 + \$7,900 + \$83,650 = \$98,450 \][/tex]
### Step 4: Add the fixed overhead costs to the variable overhead costs
Now, we need to include the supplies and fixed overhead costs to the variable overhead cost to get the total overhead cost.
Given:
- Supplies: \[tex]$32,900
- Fixed Overhead: \$[/tex]16,700
So the total overhead cost for 3,400 machine-hours is:
[tex]\[ \text{Total overhead cost} = \text{Variable overhead cost} + \text{Fixed overhead costs} + \text{Supplies} + \text{Fixed Overhead} \][/tex]
[tex]\[ = \$18,700 + \$32,900 + \$16,700 + \$98,450 = \$166,750 \][/tex]
Hence, the total budgeted overhead cost for Kerekes Manufacturing Corporation, if the activity level is 3,400 machine-hours, is \$166,750.
