Flexible Budget for Assembly Department Cabinaire Inc. is one of the largest man

Question

Flexible Budget for Assembly Department

Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:

Prepare a flexible budget for 15,000, 19,000, and 23,000 filing cabinets for the month of August in the Assembly Department, similar to Exhibit 5. Assuming that inventories are not significant. Enter all amounts as positive numbers.

Direct labor per filing cabinet 20 minutes Supervisor salaries $150,000 per month Depreciation $19,000 per month Direct labor rate $12 per hour

Explanation / Answer

ASSEMBLY DEPARTMENT Flexible Production Budget August 2016 Units of production 15000 19000 23000 Variable cost: Direct labour 60000 76000 92000 Total variable cost 60000 76000 92000 Fixed cost: Supervisor salaries 150000 150000 150000 Depreciation 19000 19000 19000 Total fixed cost 169000 169000 169000 Total department cost 229000 245000 261000

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