Fixed Costs Remain Constant at $450,000 Per Month

question 88

Multiple Choice

Fixed costs remain constant at $450,000 per month. During high-output months variable costs are $300,000, and during low-output months variable costs are $125,000. What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 24,000 for high-output months and 5,000 for low-output months?

• A) $31.25 per hour; $115.00 per hour
• B) $31.25 per hour; $31.25 per hour
• C) $18.75 per hour; $25.00 per hour
• D) $12.50 per hour; $115.00 per hour

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