Question

At the beginning of the period, the Cutting Department budgeted direct labor of $136,000, direct materials of $156,000 and fixed factory overhead of $10,100 for 7,000 hours of production. The department actually completed 10,300 hours of production. The appropriate total budget for the department, assuming it uses flexible budgeting, is Round your final answer to the nearest dollar. Do not round interim calculations. a.$444,519 b.$306,861 c.$439,757 d.$302,100

Answer 1

A

Step-by-step explanation:

In this question, we will calculate the appropriate total budget for the department.

We employ a mathematical approach as follows;

direct labor =$136,000

direct material =$156,000

fixed factory overhead = $10,100

total cost will be ---- 136,000 + 156,000+ 10,100 = $302,100 (for 7,000 hrs of production)

the cost of 1 hr of production is 302,100/7,000= $43.16

so in order to extend it to 10,300 we need (10,300-7,000) = 3,300 more hrs of production

3,300 * 43.16 = 142,419

adding this to 302,100 + 142,419 = $444,519