Question

Outdoor Optics Company produces binoculars of two quality levels: field and professional. The field model requires four direct-labor hours, while the professional binoculars require six hours. The firm uses direct-labor hours as the activity level for flexible budgeting.

Required:
1. How many standard hours are allowed in May, when 300 field models and 400 professional binoculars are manufactured?
2. Suppose the company based its flexible overhead budget for May on the number of binoculars manufactured, which is 700. What difficulties would this approach cause?



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  • CreatedApril 22, 2014
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