Question

Exercise 23-12 a-b Venetian Company has two production departments, Fabricating and Assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain total budgeted costs. Separate graphs based on direct labor hours are used for each department. The graphs show the following. 1. At zero direct labor hours, the total budgeted cost line and the fixed cost line intersect the vertical axis at $50,000 in the Fabricating Department and 543,000 in the Assembling Department. 2. At normal capacity of 46,400 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $142,800 in the Fabricating Department, and $98,680 in the Assembling Department. State the total budgeted cost formula for each department. (Round cost per direct labor hour to 2 decimal places, e.g. 1.25.) Fabricating Department = total o rs per direct labor hour Assembling Department = total of $ per direct labor hour Compute the total budgeted cost for each department, assuming actual direct labor hours worked were 49,400 and 43,400, in the Fabricating and Assembling Departments, respectively. Fabricating Department Assembling Department The total budgeted cost

Answer 1

	At Nil Usage, Cost involved is Fixed Cost:
	Fabricating Department	50,000
	Assembling Department	43,000
		A	B	C=A-B	D	C/D
	Cost at 46400 DLH Level:	Total Cost	Fixed Cost	Variable Cost	DLH Used	Variable Cost per DLH
	Fabricating Department	1,42,800	50,000	92,800	46400	2.00
	Assembling Department	98,680	43,000	55,680	46400	1.20
	Fabricating Department	50,000	Fixed	Variable	2.00	Per Direct Labor Hour
	Assembling Department	43,000	Fixed	Variable	1.20	Per Direct Labor Hour
	Cost At 49400 in Fabricating and 43400 in Assembling Dept:
		A	B		A+B
		Fixed Cost	Variable Cost		Total Cost
	Fabricating Department	50,000	98,800	(49400*2)	1,48,800
	Assembling Department	43,000	52,080	(43400*1.2)	95,080