Determining Overhead Costs: Trepid Manufacturing Company

Trepid Manufacturing Company prepared a fixed budget of 40,000 direct labor hours, with estimated overhead costs of $200,000 for variable overhead and $60,000 for fixed overhead. Trepid then prepared a flexible budget at 38,000 labor hours. How much is total overhead costs at this level of activity?

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$200,000 / 40,000 = $5 / hour

The fixed overhead does not change.

For the new ...