Dewberry Midwifery's Cost Formula for Its Wages and Salaries Is

question 102

Multiple Choice

Dewberry Midwifery's cost formula for its wages and salaries is $1,960 per month plus $429 per birth. For the month of December, the company planned for activity of 128 births, but the actual level of activity was 130 births. The actual wages and salaries for the month was $56,020. The wages and salaries in the flexible budget for December would be closest to:

• A) $57,761
• B) $57,730
• C) $56,020
• D) $56,872

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.

Unit Product Cost

The calculation of the total cost (including materials, labor, and overhead) to produce a single unit of a product.

Variable Costing

A costing method in which all variable manufacturing costs are included as inventoriable costs, while fixed manufacturing overhead is treated as an expense of the period.

Net Operating Income

A company's operating income after all operating expenses, excluding taxes and interest, have been deducted.