Within the relevant range of output, you determine that the following fixed overhead costs per month should occur: engineering support, $15,500; insurance on the manufacturing facility, $5,500; property taxes on the manufacturing facility, $12,500; depreciation on manufacturing equipment, $14,300; indirect labor costs: supervisory salaries, $15,300; setup labor, $2,900; materials handling, $3,000. Variable overhead costs are budgeted at $46.00 per machine hour, as follows: electricity, $13.00; indirect materials: Material A = $6.00, Material B = $9.00; maintenance labor, $11.00; and manufacturing supplies, $7.00.

1. Prepare flexible budget for Edward Lee for each of the following monthly levels of machine hours:(a)4,500 (b)5,500 (c)6,500.
2. Generate an equation to represent within the relevant range, the factory overhead costs per month for Edward Lee. Use this equation to estimate monthly total overhead cost of machine hours 3,500 to 6,500, in increments of 500.

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To prepare a flexible budget for Edward Lee we need to calculate the total overhead costs for each level of machine hours Fixed overhead costs per mon... View the full answer