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

Question

Flexible Budget for Assembly Department

Steelcase 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 18,000, 20,000, and 22,000 filing cabinets for the month of August in the Assembly Department, similar to Exhibit 5.

Direct labor per filing cabinet 12 minutes Supervisor salaries $150,000 per month Depreciation $24,500 per month Direct labor rate $22 per hour

Explanation / Answer

Prepare flexible production budget :

Units or production 18000 20000 22000 Variable cost: Direct labor 79200 88000 96800 Total variable cost 79200 88000 96800 Fixed cost: Supervisor salaries 150000 150000 150000 Depreciation 24500 24500 24500 Total fixed cost 174500 174500 174500 Total department cost 253700 262500 271300

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