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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Flexible budgeting

At the beginning of the period, the Assembly Department budgeted direct labor of $120,000 and property tax of $16,000 for 5,000 hours of production. The department actually completed 5,600 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.

To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

To Calculate: The budget for the department, assuming that it uses flexible budgeting.

Explanation

Calculate the budget for the department.

Flexible Budget
Particulars Amount ($)
Variable Cost:
      Direct Labor 134,400 (2)
Fixed Cost:
       Property Tax 16,000
Total Department Costs 150,400

Table (1)

Working Note:

Calculate the direct labor cost per hour.

Department budgeted direct labor = $120,000

Total production hours = 5,000

Direct labor cost=

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