Question

Cabinaire Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:

Direct labor per filing cabinet	30 minutes
Supervisor salaries	$135,000 per month
Depreciation	$16,000 per month
Direct labor rate	$15 per hour

Prepare a flexible budget for 13,000, 16,000, and 20,000 filing cabinets for the month ending February 28 in the Assembly Department similar to Exhibit 5. Round your final answers to the whole dollar, if required.

Answer 1

Cabinaire Inc-Assembly Department
Flexible Production Budget
Month Ending March 31
Units of production	13000	16000	20000
Variable cost:
Direct labor	97500	120000	150000
Total variable cost	97500	120000	150000
Fixed cost:
Supervisor salaries	135000	135000	135000
Depreciation	16000	16000	16000
Total fixed cost	151000	151000	151000
Total department cost	248500	271000	301000

Workings:
Hours per unit	0.5	=30/60
Units of production	13000	16000	20000
Direct labor	=13000*0.5*15	=16000*0.5*15	=20000*0.5*15