Adams Corporation Has Developed the Following Flexible Budget Formula for Annual

question 97

Multiple Choice

Adams Corporation has developed the following flexible budget formula for annual indirect labour cost: Total cost = $4800 + 50c per machine hour. Operating budgets for the current month are based on 20 000 hours of planned machine time. Calculate the amount of indirect labour costs included in this planning budget.

• A) $7200
• B) $10 000
• C) $14 400
• D) None of the given answers

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Definitions:

Monthly Interest Rate

The interest rate that is applied on a monthly basis to the principal of a loan or mortgage to calculate the monthly interest payment.

Net Present Value

A valuation method that calculates the present value of an investment's expected cash flows, minus the initial investment cost.

Monthly Interest Rate

The percentage of interest that is charged or earned on a loan or investment over a month's time period.

Credit Policy

A set of guidelines that a company follows to determine credit terms for customers, such as payment period and discount rates.