What was the budgeted variable overhead at hours used in the variable overhead data?

What was the budgeted variable overhead at hours used in the variable overhead data?

• A. $61,000
• B. $64,000
• C. $60,000
• D. $62,000

Answer: (B)

The amount budgeted for variable overhead at the hours used is found by multiplying the budgeted variable overhead rate per hour by the actual hours used. This shows how much variable overhead the company planned to incur for that level of activity. From the data, the budgeted rate per hour is four dollars and the hours used are sixteen thousand, so the calculation is four dollars × sixteen thousand hours = sixty-four thousand dollars. That’s why the correct result is sixty-four thousand dollars. If either the rate or the hours changed, the product would change accordingly, since variable overhead varies with activity.

The amount budgeted for variable overhead at the hours used is found by multiplying the budgeted variable overhead rate per hour by the actual hours used. This shows how much variable overhead the company planned to incur for that level of activity.

From the data, the budgeted rate per hour is four dollars and the hours used are sixteen thousand, so the calculation is four dollars × sixteen thousand hours = sixty-four thousand dollars. That’s why the correct result is sixty-four thousand dollars.

If either the rate or the hours changed, the product would change accordingly, since variable overhead varies with activity.