Final answer:
The appropriate total budget for the Cutting Department with flexible budgeting is calculated by adjusting the budgeted variable costs of direct labor and direct materials to the actual production hours, then adding the fixed cost, giving a total of $437,840. This matches closest with option c. $437,797, which may be due to rounding variations.
Step-by-step explanation:
The appropriate total budget for the Cutting Department, assuming it uses flexible budgeting, can be calculated by adjusting the direct labor, direct materials, and fixed factory overhead proportional to the change in production hours. To determine the flexible budget amount, we need to calculate the variable costs per production hour and then apply this rate to the actual production hours of 10,400.
Firstly, we calculate the variable cost per hour for direct labor and direct materials. The department budgeted for $130,000 direct labor for 7,300 hours, which gives us $130,000 / 7,300 hours = approximately $17.81 per direct labor hour. Similarly, for direct materials budgeted at $170,000 for 7,300 hours, it will be $170,000 / 7,300 hours = approximately $23.29 per direct materials hour.
Next, we calculate the variable costs for the actual hours:
Direct labor variable cost = $17.81/hour * 10,400 hours = $185,224
Direct materials variable cost = $23.29/hour * 10,400 hours = $242,216
Then we add the fixed factory overhead, which remains unchanged at $10,400, to get the total budget.
So, the total flexible budget is $185,224 + $242,216 + $10,400 = $437,840 (rounded to the nearest dollar).
However, this calculated total does not match with any of the given options exactly. The closest option is c. $437,797, which may be a result of rounding differences in calculations.