The Gerald Corporation Makes and Sells a Single Product Called

question 166

Multiple Choice

The Gerald Corporation makes and sells a single product called a Clop. Each Clop requires 1.1 direct labor-hours at $8.20 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. The company is preparing a Direct Labor Budget for the first quarter of the year. If the budgeted direct labor cost for February is $162,360, then the budgeted production of Clops for February is:

• A)23,200 units
• B)21,000 units
• C)19,800 units
• D)18,000 units

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Definitions:

Sensitivity

The degree to which the output of a model or system reacts to changes in input parameters or assumptions.

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Variable Cost

Costs that vary directly with the level of production output or volume, such as materials and labor expenses directly involved in product manufacturing.

Volume of Business

The amount of transactions or operations conducted within a specified period by a company, indicating its level of activity or throughput.