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

Question

Flexible Budget for Fabrication Department

Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Assembly. Assume the following information for the Assembly Department:

Prepare a flexible budget for 10,000, 13,000, and 15,000 filing cabinets for the month of August, similar to Exhibit 5, assuming that inventories are not significant. Enter all amounts as positive numbers.

(Assumed Data)

Variable cost:

Direct labor

Fixed cost:

Supervisor salaries

Depreciation

Total fixed cost

Total department cost

Direct labor per filing cabinet 20 minutes Supervisor salaries $114,000 per month Depreciation $20,000 per month Direct labor rate $15 per hour

Explanation / Answer

Units of production 10000 13000 15000 Variable cost: Direct labor 50000 65000 75000 Fixed cost: Supervisor salaries 114000 114000 114000 Depreciation 20000 20000 20000 Total fixed cost 134000 134000 134000 Total department cost 184000 199000 209000

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