Dent Lab Car Repair projects variable labor costs of $21,500 in July when 8,600 units are produced.If production is expected to drop to 8,000 units in August, what is the expected labor cost in August?
A)$21,500
B)$20,000
C)$23,113
D)$20,900

Question

Quizplus · Accepted Answer

Variable costs change in direct proportion to changes in production volume. To find the expected labor cost for August, calculate the cost per unit for July ($21,500 / 8,600 units = $2.50 per unit), then multiply by the expected units for August (8,000 units * $2.50 = $20,000).

Dent Lab Car Repair Projects Variable Labor Costs of $21,500