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Estimated factory overhead is supervisor salary $7,600, utilities $1,900, indirect materials $1,700 and depreciation $800. What is total budgeted factory overhead?
A$10,300
B$11,200
C$13,100
D$12,000
Answer & Solution
Correct answer: D. $12,000
1. The factory overhead cost budget estimates each fixed cost independently and totals the results.
2. The four estimates are $7,600, $1,900, $1,700 and $800.
3. Their sum is $12,000, which is the budgeted factory overhead for the year.
4. This figure needs no earlier budget, which is why it can be prepared at any point.
5. $10,300 leaves out indirect materials, which are a factory cost like the rest.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 7.6 Sales Budget_
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