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Question(s) / Instruction(s):

A company’s planned activity level for next year is expected to be 100,000 machine hours, At this level of activity, the company budgeted the following manufacturing overhead costs;

                       Variable                                        Fixed

Indirect materials $90,000            Depreciation  $37,500

Indirect labor 120,000                             Taxes  7,500

Factory supplies 15,000                     Supervision 30,000

A flexible budget prepared at the 90,000 machine hours level of activity would show total

Manufacturing overhead of

a)       $277,500

b)       $225,000

c)       $270,000

d)       $265,000

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