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	20 minutes
Supervisor salaries	$141,000 per month
Depreciation	$26,000 per month
Direct labor rate	$12 per hour

Prepare a flexible budget for 14,000, 18,000, and 21,000 filing cabinets for the month of March in the Assembly Department similar to Exhibit 5. Enter all amounts as positive numbers.

Cabinaire Inc.
Assembly Department Budget
Month Ending March 31 (assumed data)
Units of production	14,000	18,000	21,000
Variable cost:
	$	$	$
Total variable cost	$	$	$
Fixed cost:
	$	$	$
Total fixed cost	$	$	$
Total department costs	$	$	$

Answer 1

direct labor
			14000	18,000	21,000
direct labor hour per filing cabinet			0.333333	0.333333	0.333333
total hours			4666.667	6000	7000
direct labor rate per hour			12	12	12
total direct labor cost			56000.00	72000	84000
			Flexible budget
units of production			14,000	18,000	21,000
Variable cost			56,000	72,000	84,000
total variable cost			56,000	72,000	84,000
fixed cost:
supervisor salaries			141,000	141,000	141,000
Depreciation			26,000	26,000	26,000
total fixed cost			167,000	167,000	167,000
total departmental costs			223,000	239,000	251,000