Venus company has developed the following flexible budget formula for annual indirect labor cost:
total annual cost = $12,000 + $0.25 per unit
operating budgets for the current month are based on 6,000 units.
indirect labor costs included in this monthly planning budget are

a. $1,250 b. $2,500 c. $3,200 d. $13,250

B. $2,500

Explanation:

Given that

Total annual cost = $12,000 + $0.25 per unit            

The $12,000 denotes the annual cost, so the monthly cost is

= $12,000 ÷ 12 months

= $1,000

And the number of units is 6,000

Now placing these values to the equation above

= $1,000 + 6,000 units × $0.25 per unit            

= $1,000 + $1,500

= $2500

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answer; microeconomics;