Question

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

Answer 1

Answer:

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