Question

Flexible Budget for Assembly Department

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	$129,000 per month
Depreciation	$33,000 per month
Direct labor rate	$21 per hour

Prepare a flexible budget for 9,000, 11,000, and 14,000 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	9,000	11,000	14,000
Variable cost:
Direct labor	$	$	$
Total variable cost	$	$	$
Fixed cost:
Supervisor salaries	$	$	$
Depreciation
Total fixed cost	$	$	$
Total department costs	$	$	$

Answer 1

Direct labor per filing cabinet = 20 Minutes

Direct Labor Cost Per Hour = $ 21 per hour

Hence, Direct Labor Cost Per 20 Minutes = $ 21 / 60 *20

= $ 7

Hence, Direct Labor Cost at 9,000 Units = $ 7 * 9,000

Direct Labor Cost at 11,000 Units = $ 7 * 11,000

Direct Labor Cost at 14,000 Units = $ 7 * 14,000

Hence the correct answer is :

Cabinaire Inc.
Assembly Department Budget
Month Ending March 31 (assumed data)
Units of production	9,000	11,000	14,000
Variable cost:
Direct labor	63,000	77,000	98,000
Total variable cost	63,000	77,000	98,000
Fixed cost:
Supervisor salaries	1,29,000	1,29,000	1,29,000
Depreciation	33,000	33,000	33,000
Total fixed cost	1,62,000	1,62,000	1,62,000
Total department costs	2,25,000	2,39,000	2,60,000