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The Chief Financial Officer suspects that indirect labor costs, which the company has traditionally viewed as being variable, may actually be a mixed cost.
The Chief Financial Officer suspects that indirect labor costs, which the company has traditionally viewed as being variable, may actually be a mixed cost. In March 2016, when the production volume was at a low of 15,000 retractors, the indirect labor cost was $4,000. In September 2016, when production volume was at its highest level (40,000 retractors), the indirect labor cost was $9,000. What would be your estimate of the total indirect labor cost for the year under Alternative 2? Assume the cost would be unaffected by inflation.
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