Asked by Laura Derhamer on Jul 28, 2024
Verified
Neubert Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During December, the company budgeted for 5,300 units, but its actual level of activity was 5,340 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for December:Data used in budgeting: Actual results for December:
The direct labor in the planning budget for December would be closest to:
A) $18,550
B) $17,980
C) $18,690
D) $17,845
Direct Labor
Factory labor costs that can be easily traced to individual units of product. Also called touch labor.
Units
A measure of quantity in accounting, production, or inventory management, often used to quantify the amount of output or sales.
- Grasp the theoretical underpinnings of flexible budgeting and how it oscillates in accordance with activity level fluctuations.
- Appraise the monetary impact of modifications in production scales or service offerings on direct materials, workers, and overhead outlays.
Verified Answer
KE
Kelli EasterdayJul 28, 2024
Final Answer :
A
Explanation :
The direct labor cost formula per unit is $12.60 + ($1.40 × DLH per unit).
In the planning budget, DLH per unit is 0.50 hours ($750 ÷ 1500 units).
Therefore, direct labor in the planning budget for December is :
$12.60 + ($1.40 x 0.50 hours x 5,300 units) = $18,550.
This is closest to choice A.
In the planning budget, DLH per unit is 0.50 hours ($750 ÷ 1500 units).
Therefore, direct labor in the planning budget for December is :
$12.60 + ($1.40 x 0.50 hours x 5,300 units) = $18,550.
This is closest to choice A.
Learning Objectives
- Grasp the theoretical underpinnings of flexible budgeting and how it oscillates in accordance with activity level fluctuations.
- Appraise the monetary impact of modifications in production scales or service offerings on direct materials, workers, and overhead outlays.
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