Flexible budgeting At the beginning of the period, the Fabricating Department budgeted direct labor of $68,400 and equipment depreciation of $42,000 for 3,800 hours of production. The department actually completed 4,900 hours of production. Only numbers are allowed in this field. ssuming that it uses flexible budgeting. x Feedback Check My Work Remember that a flexible budget is constructed by first identifying the relevant activity levels, secondly identifying the fixed and variable cost components of the costs being budgeted, and then preparing the budget for each activity level.