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16 February, 06:21

Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 6,100 units, but its actual level of activity was 6,050 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Fixed element per month Variable element per unit Revenue - $ 33.60 Direct labor $ 0 $ 5.60 Direct materials 0 13.20 Manufacturing overhead 31,000 1.10 Selling and administrative expenses 24,900 0.30 Total expenses $ 55,900 $ 20.20 Actual results for May: Revenue $ 204,100 Direct labor $ 33,360 Direct materials $ 81,200 Manufacturing overhead $ 40,500 Selling and administrative expenses $ 30,410 The direct labor in the planning budget for May would be closest to:

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  1. 16 February, 06:55
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    The correct answer is $33,880.

    Explanation:

    According to the scenario, the given data are as follows:

    Direct labor = $5.60 per unit

    Actual level of Activity = 6,050

    So, we can calculate the direct labor in planning budget by using following formula:

    Direct labor in planning budget = Actual level of Activity * Direct labor

    By putting the value, we get

    Direct labor in planning budget = 6,050 * $5.60

    = $33,880

    Hence, The direct labor in the planning budget for May would be closest to $33,880.
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