If 20,000 Hours of Labor Were Used in the Expenditure

question 2

Multiple Choice

If 20,000 hours of labor were used in the expenditure base, $1,000,000 was paid in salary to produce 5,000 outputs, and wages are expected to increase by 5%, the budget standard would be:

• A) 4.0 hours per output.
• B) $200 per output.
• C) 4.2 hours per output.
• D) $210 per output.

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Definitions:

Purchases Returns and Allowances

From the buyer’s perspective, returned merchandise or an adjustment for defective merchandise.

Periodic Inventory System

An inventory accounting system where updates are made on a periodic basis rather than continuously.

Condensed Income Statements

Simplified financial statements that present a summary of a company's revenue, expenses, and profitability over a particular period.

Merchandising Companies

Companies that purchase goods in a finished condition and resell them at a profit without further processing.