Buffaloe Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 5,200 units, but its actual level of activity was 5,250 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August:
-The direct labor in the planning budget for August would be closest to:
A) $40,040
B) $41,015
C) $40,425
D) $40,624

Question

Buffaloe Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During August, the company budgeted for 5,200 units, but its actual level of activity was 5,250 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for August: 
-The direct labor in the planning budget for August would be closest to:
A) $40,040 
B) $41,015 
C) $40,425 
D) $40,624

Quizplus · Accepted Answer

The direct labor in the planning budget for August would be closest to $40,040. This is because the direct labor cost is 50% of the total manufacturing cost, and the total manufacturing cost is $80,080.

Buffaloe Corporation Manufactures and Sells a Single Product