Cabinaire Inc. is one of the largest manufacturers of office furniture in the Un
ID: 2573070 • Letter: C
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:
Prepare a flexible budget for 9,000, 11,000, and 14,000 filing cabinets for the month of March similar to Exhibit 5, assuming that inventories are not significant. Enter all amounts as positive numbers.
Direct labor per filing cabinet 20 minutes Supervisor salaries $123,000 per month Depreciation $16,000 per month Direct labor rate $18 per hourExplanation / Answer
Answer:
Direct labor cost =
Time required for filing a cabinet = 20 minutes
Time required for filing 9000 cabinets = 9000 X 20 minutes = 180000 Minutes = 3000 Hours
Time required for filing 11,000 cabinets = 11,000 X 20 minutes = 220000 minutes or 3666.67 hours
Time required for filing 14,000 cabinets = 14,000 X 20 minutes = 280000 minutes or 4666.67 hours
Cabinaire Inc-Assembly Department
Flexible Production Budget
Month Ending March 31 (assumed data)
Units of production
9,000
11,000
14,000
Variable cost:
Direct labor
$54,000
$66,000
$84,000
Total variable cost (A)
$54,000
$66,000
$84,000
Fixed cost:
Supervisor salaries (B)
123,000
123,000
123,000
Depreciation (C)
16,000
16,000
16,000
Total fixed cost D= (B + C)
139,000
139,000
139,000
Total department cost E = A + D
$ 193,000
$ 205,000
$ 223,000
Working Notes
Units of production
9,000
11,000
14,000
Time (Min)
180,000
220,000
280,000
Time (Hours)
3000
3666.667
4666.667
Direct Labour cost @ $ 18 per hour
54,000
66,000
84,000
Cabinaire Inc-Assembly Department
Flexible Production Budget
Month Ending March 31 (assumed data)
Units of production
9,000
11,000
14,000
Variable cost:
Direct labor
$54,000
$66,000
$84,000
Total variable cost (A)
$54,000
$66,000
$84,000
Fixed cost:
Supervisor salaries (B)
123,000
123,000
123,000
Depreciation (C)
16,000
16,000
16,000
Total fixed cost D= (B + C)
139,000
139,000
139,000
Total department cost E = A + D
$ 193,000
$ 205,000
$ 223,000