At Zero Direct Labor Hours in a Flexible Budget Graph

question 8

Multiple Choice

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $20,000. At 10,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $60,000. Fixed and variable costs may be expressed as:

• A) $20,000 fixed plus $4 per direct labor hour variable.
• B) $20,000 fixed plus $6 per direct labor hour variable.
• C) $40,000 fixed plus $2 per direct labor hour variable.
• D) $40,000 fixed plus $4 per direct labor hour variable.