Question

In the Swifty Corporation, indirect labor is budgeted for $121500 and factory supervision is budgeted for...

In the Swifty Corporation, indirect labor is budgeted for $121500 and factory supervision is budgeted for $36000 at normal capacity of 180000 direct labor hours. If 150000 direct labor hours are worked, flexible budget total for these costs is:

$128250.

$137250.

$131250.

$157500.

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ANSWER

FLEXIABLE BUDGET TOTAL COST IS $137250

EXPLANATION

INDIRECT LABOUR PER DIRECT LABOUR HOUR =$121500/180000=$0.675

FACTORY SUPERVISION COST(IT IS A FIXED COST IT WON'T CHANGE) =$36000

FOR 150000 DIRECT LABOUR HOUR

INDIRECT LABOUR COST($0.675*150000)=$101250

SUPERVISION COST =$36000

TOTAL COST =$137250

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