At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct materials of $170,000, and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. The appropriate total budget for the department, assuming it uses flexible budgeting, is
A)$288,000
B)$305,000
C)$350,000
D)$378,000

Question

Quizplus · Accepted Answer

Flexible budgeting adjusts the budget based on actual activity levels. The variable costs (direct labor and direct materials) should be adjusted for the actual 10,000 hours of production. Fixed costs remain unchanged. The calculation is: (Direct labor per hour: $110,000/8,000 hours = $13.75/hour) + (Direct materials per hour: $170,000/8,000 hours = $21.25/hour). For 10,000 hours: (10,000 hours * $13.75) + (10,000 hours * $21.25) + $28,000 fixed overhead = $378,000.

At the Beginning of the Period, the Assembly Department Budgeted