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Identifying the Parts of the Cost Formula; Calculating Monthly, Quarterly, and Yearly Costs Using a Cost Formula Based on Monthly Data
Gordon Company's controller, Eric Junior, estimated the following formula, based on monthly data, for overhead cost:
Overhead Cost = $150,000 + ($52 x Direct Labor Hours)
Required:
1. Select the term in the right column that corresponds to the term in the left column.
| Line Item Description | Answer |
| Overhead cost | Dependent variable |
| $150,000 | Fixed cost |
| $52 | Variable rate |
| Direct labor hours | Independent variable |
2. If next month's budgeted direct labor hours equal 8,000, what is the budgeted overhead cost? Answer: 566000
3. If next quarter's budgeted direct labor hours equal 23,000, what is the budgeted overhead cost? fill in the blank?
4. If next year's budgeted direct labor hours equal 99,000, what is the budgeted overhead cost? fill in the blank?
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