Flexible Budget for Fabrication Department Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Assembly. Assume the following information for the Assembly Department: Direct labor per filing cabinet 30 minutes Supervisor salaries $180,000 per month Depreciation $15,000 per month Direct labor rate $24 per hour Prepare a flexible budget for 10,000, 25,000, and 40,000 filing cabinets for the month of August, similar to Exhibit 5, assuming that inventories are not significant. Enter all amounts as positive numbers. Steelcase Inc. - Assembly Department Month Ending August 31 (Assumed Data) Units of production Variable cost Direct labor 10,000 25,000 40,000 5,000X 12,500X X Fixed cost: Supervisor salaries Depreciation $ Total fixed cost Total department cost Feedback Y Check My Work For each level of cabinet production, show all variable costs and all fixed costs Direct Materials and Direct Labor Variances At the beginning of August, Havasu Printers Company budgeted 30,000 books to be printed in August at standard direct materials and direct labor costs as follows: $15,000 Direct materials 72,000 Direct labor Total $87,000 The standard materials price is $0.40 per pound. The standard direct labor rate is $12 per hour. At the end of August, the actual direct materials and direct labor costs were as follows: $13,320 Actual direct materials Actual direct labor 60,000 $73,320 Total There were no direct materials price or direct labor rate variances for August. In addition, assume no changes in the direct materials inventory balances in August. Havasu Printers Company actually produced 24,500 units during August. Determine the direct materials quantity variance , the direct labor time variance and the total variance. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount 1,680 X Unfavorable v Direct materials quantity variance 12,000 X Unfavorable V Direct labor time variance 13,680 X Unfavorable v Total variance Feedback Check My Work Quantity variance is the difference between the actual and standard quantities, multiplied by the standard price. Time variance is the difference between the actual and standard hours, multiplied by the standard rate per hour. Recall that total variance is determined by adding direct materials quantity variance and direct labor time variance. Factory Overhead Cost Variances The following data relate to factory overhead cost for the production of 8,000 computers: Variable factory overhead Actual: $101,750 180,000 Fixed factory overhead Standard: 248,000 8,000 hrs. at $31 If productive capacity of 100% was 10,000 hours and the factory overhead cost budgeted at the level of 8,000 standard hours was $284,000, determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. The fixed factory overhead rate was $18 per hour. Enter a favorable variance as a negative amount, and an unfavorable variance as a positive amount. Variance Amount Favorable/Unfavorable Controllable Favorable Volume Unfavorable $ Unfavorable v Total factory overhead cost variance Feedback Check My Work. Overhead controllable variance is the difference between the actual variable overhead and the standard hours for actual units multiplied by the standard variable overhead rate. Overhead volume variance is the difference between the productive capacity at 100% and the standard hours for the amount produced, multiplied by the standard fixed overhead rate. The total overhead cost variance is the volume variance plus the controllable variance, considering their identifications as favorable or unfavorable
