Question

Flexible Budgeting At the beginning of the period, the Fabricating Department budgeted direct labor of $92,500 and equipment depreciation of $41,000 for 3,700 hours of production. The department actually completed 4,400 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.

Answer 1

$151,000

Step-by-step explanation:

Fabricating department budgeted direct labor = $92,500

Budgeted labor rate = Budgeted direct labor ÷ Hours of production

= $92,500 ÷ 3,700

= $25 per hour

Direct labor = Completed hours of production × Budgeted labor rate

= 4,400 × $25

= $110,000

Budget for the fabricating department at 4,400 hours of production

Budgeted cost = Direct labor cost + Equipment depreciation

= $110,000 + $41,000

= $151,000