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# Indirect labor costs

1. Beres Corporation has developed the following flexible budget formula for annual indirect
labor cost:
Total costs = \$9,600 + \$0.75 per machine hour
Operating budgets for the current month are based on 30,000 hours of planned machine
time. The amount of indirect labor costs included in this planned budget is

A. \$2,425. C. \$23,300.
B. \$22,500. D. \$32,100.

2. The Johns Company budgeted overhead at \$125,000 for the period for Department A
based on a budgeted volume of 50,000 direct labor hours. At the end of the period, the
factory overhead control account for Department A had a balance of \$126,000. The actual
(and allowed) direct labor hours were 52,000. What was the overapplied (underapplied)

A. \$(4,000) C. \$(6,500)
B. \$4,000 D. \$6,500

3. The fixed overhead application rate is a function of a predetermined normal activity level.
If standard hours allowed for good output equal this normal activity level for a given period,
the volume variance will be

A. zero.
B. favorable.
C. unfavorable.
D. either favorable or unfavorable depending on the budgeted overhead.

#### Solution Preview

1. Beres Corporation has developed the following flexible budget formula for annual indirect labor cost:
Total costs = \$9,600 + \$0.75 per machine hour.

Operating budgets for the current month are based on 30,000 hours of planned machine time. The amount of indirect labor costs included in this planned budget is

A. \$2,425. C. \$23,300.
B. \$22,500. D. ...

#### Solution Summary

Response helps in providing steps to calculate the indirect labor costs

\$2.19