Flexible Budget

Sherrer Company has two production departments: fabricating and assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain the total budgeted costs. Separate graphs based on direct labour hours are used for each department. The graphs show the following: 1. At zero direct labour hours, the total budgeted cost line and the fixed cost line intersect the vertical axis at $54,000 in the fabricating department and at $44,000 in the assembling department. At normal capacity of 52,500 direct labour hours, the line drawn from the total budgeted cost line intersects the vertical axis at $185,250 in the fabricating department, and $143,750 in the assembling department. 2. State the total budgeted cost formula for each department. (Round cost per direct labour hour to 2 decimal places, e.g. 1.25.) Fabricating Department + total v ofs Assembling Department + total v ofs Calculate the total budgeted cost for each department, assuming actual direct labour hours worked were 55,500 and 49,500 in the fabricating and assembling departments, respectively. Assembling Department Fabricating Department $ The total budgeted cost