At the beginning of the period,the Cutting Department budgeted direct labor of $155,000,direct materials of $165,000,and fixed factory overhead of $15,000 for 9,000 hours of production.The department actually completed 10,000 hours of production.What is the appropriate total budget for the department,assuming it uses flexible budgeting?
A) $416,000
B) $370,556
C) $368,889
D) $335,000

Question

Quizplus · Accepted Answer

To determine the appropriate total budget for the Cutting Department, we need to use flexible budgeting. The flexible budget formula is:
Flexible Budget = (Variable costs per hour x actual hours of production) + Fixed costs

Variable costs per hour can be calculated using the budgeted direct labor and direct materials. In this case, variable costs per hour = ($155,000 + $165,000) / 9,000 hours = $34.44 per hour.

Using the actual hours of production (10,000) and the fixed factory overhead budgeted at the beginning of the period ($15,000), we can calculate the flexible budget for the Cutting Department as follows:
Flexible Budget = ($34.44 x 10,000) + $15,000 = $370,556

Therefore, the appropriate total budget for the department, assuming it uses flexible budgeting, is $370,556 (option B).

At the Beginning of the Period,the Cutting Department Budgeted Direct