Jason, Inc.produces leather purses.Jason has developed a static budget for the first quarter, based on 20,000 direct labor hours.During the quarter, the actual activity was 22,000 direct labor hours.Data for the first quarter are summarized as follows:

- What is the flexible budget amount for the first quarter?

Question

Jason, Inc.produces leather purses.Jason has developed a static budget for the first quarter, based on 20,000 direct labor hours.During the quarter, the actual activity was 22,000 direct labor hours.Data for the first quarter are summarized as follows:

- What is the flexible budget amount for the first quarter?

Quizplus · Accepted Answer

11ea8a4c_489b_a9cf_a0e6_19a9e2341417_TB5550_00 *$80,000 / 20,000
**$160,000 / 20,000
 
The flexible budget here is created by creating standard rates from the static budget.$80,000 or direct labor / 20,000 labor hours yields $4.00/labor hour.This standard rate is multiplied by the actual labor hours to get the standard labor hours for the actual activity level.