Fixed Costs Remain Constant at $200,000 Per Month

question 42

Multiple Choice

Fixed costs remain constant at $200,000 per month.During high-output months variable costs are $160,000, and during low-output months variable costs are $40,000.What are the respective high and low indirect cost allocation rates if professional labour-hours are 8,000 for high-output months and 2,000 for low-output months?

• A)$45.00 per hour; $120.00 per hour
• B)$45.00 per hour; $45.00 per hour
• C)$25.00 per hour; $20.00 per hour
• D)$56.20 per hour; $120.00 per hour
• E)$25.00 per hour; $100.00 per hour

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Definitions:

Marginal Product

The additional output resulting from the use of one more unit of a production input.

Newly Built Homes

Houses that have been recently constructed and are ready for occupancy, often indicating new developments in housing markets.

Construction Workers

Laborers specifically trained to work on construction sites, handling various tasks from basic site preparation to finishing work.

Derived Demand

Derived demand occurs when the demand for a good or service arises from the demand for another good or service.