Question

At the beginning of the period, the Cutting Department budgeted direct labor of $136,000, direct materials of $150,000 and fixed factory overhead of $11,900 for 8,000 hours of production. The department actually completed 10,600 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.

Answer 1

Total cost under flexible budgeting is $390,850

Step-by-step explanation:

Calculation of Standard direct labor Cost

Standard Direct labor Cost=Budgeted Labor cost/Budgeted hour of Production

=$136,000 / 8,000

=$17 per hour

Calculation of Standard material Cost

Standard material Cost = Budgeted material Cost /Budgeted hour of Production

=$150,000 / 8,000

=$18.75 per hour

Calculation of Total cost under flexible budgeting

Direct Material Cost = 10,600 * $18.75 = $198,750

Direct Labour Cost= 10,600 * 17 = $180,200

Fixed factory overhead= $11,900

Total budgeted cost $390,850