Assume the Costs of a Service Department Are Driven by the Number

question 61

True/False

Assume the costs of a service department are driven by the number of service orders and the equation for calculating the costs of a service department is y = $5000 + $3x. The cost of the department if there were 6000 orders would be $25 000.

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Definitions:

Spending Variance

The difference between the actual amount spent on a budget item and the amount that was expected or budgeted.

Indirect Labor

The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process.

Spending Variance

This refers to the difference between the budgeted amount of spending and the actual amount spent.