At the beginning of the period, the Grinding Department budgeted direct labor of $19,800 and property tax of $51,000 for 1,100 hours of production. The department actually completed 1,500 hours of production.

Required:

Determine the budget for the department, assuming that it uses flexible budgeting.

Question

Business

Harding

28 September, 10:38

At the beginning of the period, the Grinding Department budgeted direct labor of $19,800 and property tax of $51,000 for 1,100 hours of production. The department actually completed 1,500 hours of production.

Required:

Determine the budget for the department, assuming that it uses flexible budgeting.

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Answers (1)

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Makhi Mcknight · Answer 1

Budget for the Grinding department is $78,000, assuming that it uses flexible budgeting.

Explanation:

Note: Fixed cost remain constant at any level of production

Budgeted Direct labor at 1,100 hours of production is

= Budgeted direct labor / hours

= 19,800 / 1,100

=$18 per hour

Direct labor cost at 1,500 hours of production is:

=1,500 * $18

=$27,000

Budget for the Grinding department at 1,500 hour of production is:

=Direct labor cost + Property tax

=$27,000 + $51,000

=$78,000

At the beginning of the period, the Grinding Department budgeted direct labor of $19,800 and property tax of $51,000 for 1,100 hours of production. The department actually completed 1,500 hours of production.Required:Determine the budget for the department, assuming that it uses flexible budgeting.