Question Details

Flify Manufacturing Inc., incurred total indirect manufacturing labor costs



Answer the following questions using the information below:

Flify Manufacturing Inc., incurred total indirect manufacturing labor costs of $500,000. The company is labor intensive. Total labor hours during the period were 5,000. Using qualitative analysis, the manager and the management accountant determine that over the period the indirect manufacturing labor costs are mixed costs with only one cost driver-labor-hours. They separated the total indirect manufacturing labor costs into costs that are fixed ($110,000 based on 8,000 hours of labor) and costs that are variable ($390,000) based on the number of labor-hours used. The company has estimated 7,000 labor hours during the next period.

1) Which of the following represents the correct linear cost function?
A) y = $390,000 + $ 48.75X
B) y = $110,000 + $100 X
C) y = $110,000 + $78 X
D) y = $390,000 + $62.50 X


2) What will be the variable cost per hour?
A) $78
B) $48.75
C) $62.50
D) $100

3) What will be the total variable cost for the estimated 7,000 hours?
A) $341,250
B) $546,000
C) $700,000
D) $437,500


4) What will be the total cost for the estimated 7,000 hours?
A) $451,250
B) $547,500
C) $700,000
D) $656,000




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