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17 July, 19:23

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: Static budget (20,000 hours) Actual costs (22,000 hours) Direct materials cost $ 80,000 $ 87,000 Direct labor cost 160,000 174,000 Building rental 48,000 50,000 Total $288,000 $311,000 What is the flexible budget amount for the first quarter?

a.$311,000

b.$261,000

c.$288,000

d.$312,000

e. Cannot be determined.

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Answers (1)
  1. 17 July, 19:54
    0
    total cost flexible budget = $312000

    so correct option is d.$312,000

    Explanation:

    given data

    Static budget Actual costs

    (20,000 hours) (22,000 hours)

    Direct materials cost $ 80,000 $ 87,000

    Direct labor cost 160,000 174,000

    Building rental 48,000 50,000

    Total $288,000 $311,000

    to find out

    flexible budget amount for the first quarter

    solution

    first we get here direct material cost for flexible budget that is express as

    direct material cost is 80000

    and here no of hour = 20000 and rate is 4 per hour

    so cost for 22000 hour is = $88000 ... 1

    and

    direct labor cost for flexible budget is

    here direct labor cost is = 160000

    and and here no of hour = 20000 and rate is 8 per hour

    so cost for 22000 hour is = $176000 ... 2

    so total cost flexible budget amount for the first quarter is here as

    total cost flexible budget = direct material + direct labor cost + building rental ... 3

    total cost flexible budget = $88000 + $176000 + 48000

    total cost flexible budget = $312000

    so correct option is d.$312,000
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