Which amount represents the budgeted fixed overhead in the provided data?

Which amount represents the budgeted fixed overhead in the provided data?

• A. $21,000
• B. $20,000
• C. $24,000
• D. $19,000

Answer: (B)

The number represents the constant portion of overhead that does not change with production volume. In overhead budgeting, fixed overhead is the amount planned to be spent regardless of how many units are produced, while variable overhead varies with activity. From the data, the amount that stays the same as activity changes is $20,000, which is why that figure is the budgeted fixed overhead. The other numbers would typically reflect variable costs or totals that change with volume, not the fixed component.

The number represents the constant portion of overhead that does not change with production volume. In overhead budgeting, fixed overhead is the amount planned to be spent regardless of how many units are produced, while variable overhead varies with activity. From the data, the amount that stays the same as activity changes is $20,000, which is why that figure is the budgeted fixed overhead. The other numbers would typically reflect variable costs or totals that change with volume, not the fixed component.