Gary corporation has developed the following flexible budget formula for monthly overhead: for output of les than 200,000 units: $36,600 + $80 (units) for output of 200,000 units or more: $43,000+$80 (units), How much overhead should Gary expect if the firm plans to produce 200,000 units?
43000+80*200000
To calculate the overhead, we need to use the given flexible budget formula for monthly overhead:
For output of less than 200,000 units: $36,600 + $80 (units)
For output of 200,000 units or more: $43,000 + $80 (units)
Since the firm plans to produce 200,000 units, we will use the second part of the formula.
Substitute the value of units (200,000) into the formula:
Overhead = $43,000 + $80 (units)
Overhead = $43,000 + $80 (200,000)
Overhead = $43,000 + $16,000,000
Overhead = $16,043,000
Therefore, Gary should expect an overhead of $16,043,000 if the firm plans to produce 200,000 units.
To calculate the expected overhead for producing 200,000 units using the given flexible budget formula, you would follow these steps:
Step 1: Identify the output range
The formula provided specifies two output ranges: less than 200,000 units and 200,000 units or more. Since we are interested in the output of exactly 200,000 units, we fall into the "200,000 units or more" range.
Step 2: Substitute the values into the formula
Now that we know the output range, we can substitute the values into the formula. For the output range of "200,000 units or more," the formula is:
$43,000 + $80 (units)
Step 3: Calculate the overhead
To calculate the overhead, plug in the given output of 200,000 units into the formula:
$43,000 + ($80 * 200,000)
Step 4: Perform the calculation
Multiply $80 by 200,000 to get $16,000,000. Then add this value to the initial $43,000:
$43,000 + $16,000,000 = $16,043,000
Therefore, Gary should expect an overhead of $16,043,000 if the firm plans to produce 200,000 units.