A flexible budget for a level of activity of 60,000 machine hours would show total manufacturing overhead costs of $1,482,000.
The computation of the total manufacturing overhead cost is shown below:
But before that, we need to do the following calculations:
For 50000 machine hours, the variable overhead is
= $1,260,000 - $150,000
= $1,110,000
As depreciation is not a variable cost, it would be excluded.
Now, for 60,000 machine hours, the variable overhead is
= ($1,110,000 ÷ 50,000) × 60,000
= $1,332,000
And the fixed overhead, or depreciation expense, is $150,000.
So, the total manufacturing overhead cost is
= Fixed manufacturing overhead + variable manufacturing overhead
= $150,000 + $1,332,000
= $1,482,000
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