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

Question

Abagail Mcintosh

Business

6 June, 04:48

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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Answers (1)

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Tommy Schneider · Answer 1

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