Question

In the Sheffield Corp., indirect labor is budgeted for $108000 and factory supervision is budgeted for $36000 at normal capacity of 160000 direct labor hours. If 180000 direct labor hours are worked, flexible budget total for these costs is:_______

a. $157500.
b. $144000.
c. $162000.
d. $148500.

Answer 1

Total flexible cost= $157,500

Step-by-step explanation:

Factory supervisor is a fixed cost.

First, we need to calculate the unitary variable cost:

Unitary variable cost= 108,000/160,000= $0.675

Now, the total flexible cost for 180,000 hours:

Total flexible cost= 0.675*180,000 + 36,000

Total flexible cost= $157,500