Haroot Company's Master Budget Shows That the Planned Activity Level

Multiple Choice

Haroot Company's master budget shows that the planned activity level for next year is expected to be 20,000 machine hours.At this level of activity, the following manufacturing overhead costs are expected: $$\begin{array} { l l } \text { Indirect labour } & \$ 45,000 \\\text { Factory supplies } & 4,000 \\\text { Indirect materials } & 2 1 , 0 0 0 \\\text { Depreciation on factory building } &\underline{ 15,000 }\\ \text { Total manufactuing overhead } &\underline{\$85,000}\end{array}$$ Indirect labour, factory supplies, and indirect materials are variable costs.If the company operates at 21,000 machine hours, how much is allowed on a flexible budget for manufacturing overhead costs?

A) $89,250
B) $73,500
C) $88,500
D) $85,000