At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct material 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

Flexible budgeting adjusts the budget based on the actual activity level. To find the appropriate total budget for the department, we need to calculate the flexible budget using the given information.

Flexible budget for direct labor:
$155,000 / 9,000 hours x 10,000 hours = $172,222

Flexible budget for direct material:
$165,000 / 9,000 hours x 10,000 hours = $183,333

Flexible budget for fixed factory overhead:
$15,000

Total flexible budget:
$172,222 + $183,333 + $15,000 = $370,556

Therefore, the appropriate total budget for the Cutting Department using flexible budgeting is $370,556, which is option B.

At the Beginning of the Period, the Cutting Department Budgeted