Bob and Sons' Static Budget for 10,000 Units of Production

question 121

Multiple Choice

Bob and Sons' static budget for 10,000 units of production includes $50,000 for direct materials, $44,000 for direct labor, variable utilities of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show:

• A) the same cost structure in total
• B) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $30,000
• C) total variable costs of $148,000
• D) direct materials of $60,000, direct labor of $52,800, utilities of $6,000, and supervisor salaries of $25,000

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Definitions:

Management Negotiators

Individuals or teams designated by an organization's management to represent the company in bargaining discussions with labor unions or employees.

Contract Settlement

The final agreement reached between parties (e.g., between employer and employees' union) outlining the terms and conditions of employment after negotiations, usually formalized in a written document.

Relative Bargaining Power

The balance of power between negotiating parties, which can affect the outcome of negotiations, often determined by one party's ability to exert more influence or resources than the other.

Strike Leverage

The power that employees and unions have during negotiations, derived from their ability to organize a work stoppage or strike effectively.