Fixed Costs Remain Constant at $400,000 Per Month

question 181

Multiple Choice

Fixed costs remain constant at $400,000 per month.During high-output months variable costs are $320,000,and during low-output months variable costs are $80,000.What are the respective high and low indirect-cost rates if budgeted professional labor-hours are 16,000 for high-output months and 4,000 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

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