In the Goblette Manufacturing Company- indirect labor is budgeted for.docx

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The document provides budget information for indirect labor and factory supervision costs at Goblette Manufacturing Company. Indirect labor is budgeted at $108,000 for 160,000 direct labor hours, while factory supervision is a fixed $36,000. If direct labor hours increase to 180,000, the flexible budget total for indirect labor and factory supervision would be $157,500.

Formation

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory
supervision is budgeted for $36,000 at normal capacity of 160,000 direct labor hours. If 180,000
direct labor hours are worked, flexible budget total for these costs is:
$144,000.
$162,000.
$157,500.
$148,500
$144,000
.
$162,000.
$157,500.
$148,500
Solution
Hi,
Please find the detailed answer as follows:
Flexible Budget Total = 108000/160000*180000 + 36000 = $157500
Option C ($157500) is the correct answer.
Notes:
1) Factory Supervision Cost is a fixed cost and it will remain constant.
Thanks.

In the Goblette Manufacturing Company- indirect labor is budgeted for.docx

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