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9 November, 23:35

At Jacobson Company, indirect labor is a variable cost that varies with direct labor-hours. Last month's performance report showed that actual indirect labor cost totaled $5,780 for the month and that the associated spending variance was $245 F. If 24,100 direct labor-hours were actually worked last month, then the flexible budget cost formula for indirect labor must be (per direct labor-hour) : A) $0.20 B) $0.25 C) $0.30D) $0.35

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  1. 10 November, 00:57
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    B) $0.25

    Explanation:

    Jacobson Company

    Given

    Actual indirect labor cost $5,780

    Spending variance $245 F

    Actual Direct labor-hours 24,100

    Formula

    Spending Variance = Flexible Budget - Actual Results

    Working

    Spending Variance = Flexible Budget - Actual Results

    Spending Variance = Indirect Labor Cost per direct labor hour - Actual Results

    $245 F = Indirect Labor Cost (per direct labor-hour) * 24,100 - $5,780

    Indirect Labor Cost*24,100 = 245 + 5780

    Indirect Labor Cost * 24,100 = $6,025

    Indirect Labor Cost = $6,025 / 24,100

    Indirect Labor Cost per direct labor-hour = $0.25
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