In a flexible budget, the Assembly Department's expenses for 5,600 hours of production would be adjusted based on the original budgeted rates. With an initial budget of $120,000 for direct labor and $16,000 for property tax over 5,000 hours, the adjusted budget for 5,600 hours would be $134,400 for direct labor and $18,560 for property tax, reflecting the additional production hours.
In a flexible budgeting scenario, the Assembly Department's initial budget of $120,000 for direct labor and $16,000 for property tax, based on 5,000 hours of production, needs adjustment for the actual production of 5,600 hours. To determine the flexible budget, the budgeted rates per hour for direct labor and property tax are calculated. The direct labor rate is $120,000/5,000 hours = $24 per hour, and the property tax rate is $16,000/5,000 hours = $3.20 per hour. These rates are then applied to the actual production hours: $24/hour * 5,600 hours = $134,400 for direct labor, and $3.20/hour * 5,600 hours = $18,560 for property tax. Therefore, the flexible budget for the Assembly Department, considering 5,600 hours of production, would be $134,400 for direct labor and $18,560 for property tax. This reflects a more accurate representation of expenses based on the actual level of production, allowing for better variance analysis and performance evaluation.