At the beginning of the period, the Assembly Department budgeted direct labor of $123,500 and property tax of $10,000

At the beginning of the period, the Assembly Department budgeted direct labor of $123,500 and property tax of $10,000 for 6,500 hours of production. The department actually completed 7,300 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.

Answer:


Variable cost: 
Direct labor (7,300 hours × $19.00* per hour)………………………………………  $138,700 
Fixed cost: 
Property tax………………………………………………………………………………     10,000 
Total department costs…………………………………………………………………… $148,700 
* $123,500 ÷ 6,500 hours