Asked by
Beverly McDonald
on Dec 17, 2024
Verified
At Rost Corporation, indirect labor is a variable cost that varies with direct labor-hours. Last month's performance report showed that actual indirect labor cost totaled $7,540 for the month and that the associated spending variance was $560 F. If 10,800 direct labor-hours were actually worked last month, then the flexible budget cost formula for indirect labor must be (per direct labor-hour) closest to:
A) $0.75
B) $0.80
C) $0.85
D) $0.65
Indirect Labor
Labor costs not directly attributable to the production of goods or services, such as salaries for supervisors or maintenance staff.
Direct Labor-Hours
Direct labor-hours refer to the total hours worked by employees directly involved in producing a product.
Spending Variance
The difference between the budgeted amount of spending and the actual amount spent.
- Gauge the spending variances within various cost segments.
- Utilize cost per unit and per activity measures in budgeting processes.
Verified Answer
AS
Learning Objectives
- Gauge the spending variances within various cost segments.
- Utilize cost per unit and per activity measures in budgeting processes.
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