In the overhead budget, what is the fixed overhead amount represented by supervisory salaries?

In the overhead budget, what is the fixed overhead amount represented by supervisory salaries?

• A. 60,000
• B. 80,000
• C. 140,000
• D. 0

Answer: (A)

Fixed overhead includes costs that don’t change with production level in the short run. Supervisory salaries are a classic fixed overhead item because the salary is paid regardless of how much is produced. So, the fixed overhead amount represented by supervisory salaries is simply the total salary cost itself. If supervisory salaries total 60,000 in the budget, that 60,000 is the fixed overhead from supervisory salaries. The other numbers would imply additional fixed costs or a different allocation, but they don’t reflect the salary amount itself.

Fixed overhead includes costs that don’t change with production level in the short run. Supervisory salaries are a classic fixed overhead item because the salary is paid regardless of how much is produced. So, the fixed overhead amount represented by supervisory salaries is simply the total salary cost itself. If supervisory salaries total 60,000 in the budget, that 60,000 is the fixed overhead from supervisory salaries. The other numbers would imply additional fixed costs or a different allocation, but they don’t reflect the salary amount itself.