Higgs Enterprise's flexible budget cost formula for indirect materials, a variable cost, is $0.75 per unit of output. If the company's performance report for last month shows a $600 favorable spending variance for indirect materials and if 8,000 units of output were produced last month, then the actual costs incurred for indirect materials for the month must have been:

A) $6,000
B) $5,400
C) $6,600
D) $5,200

Indirect Materials

Materials used in the support of the production process that are not easily traced to specific products, essential for maintaining production equipment.

Favorable Variance

A financial term indicating that actual costs were less or actual revenues were more than what was budgeted or forecasted.

Variable Cost

Variable costs vary directly with the level of production output, including expenses like raw materials and direct labor.