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 $45,000 in the fabricating department and at $35,000 in the assembling department. At normal capacity of 48,300 direct labour hours, the line drawn from the total budgeted cost line intersects the vertical axis at $160,920 in the fabricating department, and $107,450 in the assembling department. 2