Question

At the beginning of the period, the Fabricating Department budgeted direct labor of $51,000 and equipment depreciation of $59,000 for 3,400 hours of production. The department actually completed 4,100 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting. $

Answer 1

= $120,500.00

Step-by-step explanation:

Flexible budget is that which is that which recognizes the cost behavior and is used for control purpose. It is prepared based on the actual level of activity achieved.

Kindly note that the $59,000 depreciation is a fixed cost which do not vary with the hours of production.

The flexible budget for the department will be

Direct Labour budget = ( 51000/3400) × 4,100

= $61,500.00

Equipment depreciation= $59,000

Total flexible budget = $61,500.00 + $59,000

= $120,500.00