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QUESTION
Scenario B Houston Corporation considers materials and labor to be completely variable costs. Expected production for the year is 50,000 units.
Scenario B
Houston Corporation considers materials and labor to be completely variable costs. Expected production for the year is 50,000 units.
- At that level of production, direct materials cost is budgeted at $198,000, and direct labor cost is budgeted at $450,000. What would a flexible budget for materials and labor for possible production levels of 52,500, 60,000, and 67,500 units of product look like?
- Assume that in the previous exercise the actual production was 60,000 units, materials cost was $247,000, and labor cost was $510,000. What are the budget variances?
