At the beginning of the period, the Molding Department budgeted direct labor of $33,000 and supervisor salaries of $24,000 for 3,000 hours of production. The department actually completed 2,500 hours of production. Determine the budget for the department assuming that it uses flexible budgeting?

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13 November, 15:49

At the beginning of the period, the Molding Department budgeted direct labor of $33,000 and supervisor salaries of $24,000 for 3,000 hours of production. The department actually completed 2,500 hours of production. Determine the budget for the department assuming that it uses flexible budgeting?

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Giuliana · Answer 1

Molding = $47,500

Explanation:

Giving the following information:

At the beginning of the period, the Molding Department budgeted direct labor of $33,000 and supervisor salaries of $24,000 for 3,000 hours of production. The department completed 2,500 hours of production.

Under a flexible budget, the cost is determined by using the standard costs and actual level of production, or in this case, of hours.

Standard cost = (33,000 + 24,000) / 3,000 = $19 per direct labor hour

Now, we can calculate the flexible budget cost:

Molding = 19*2,500 = $47,500