At Zero Direct Labor Hours in a Flexible Budget Graph

At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $20,000. At 10,000 direct labor hours, a horizontal line drawn from the total budgeted cost line intersects the vertical axis at $60,000. Fixed and variable costs may be expressed as:

A) $20,000 fixed plus $4 per direct labor hour variable.
B) $20,000 fixed plus $6 per direct labor hour variable.
C) $40,000 fixed plus $2 per direct labor hour variable.
D) $40,000 fixed plus $4 per direct labor hour variable.

Correct Answer:

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