At the beginning of the period, the Fabricating Department budgeted direct labor of $9,280 and equipment depreciation

At the beginning of the period, the Fabricating Department budgeted direct labor of $9,280 and equipment depreciation of $2,300 for 640 hours of production. The department actually completed 600 hours of production. Determine the budget for the department, assuming that it uses flexible budgeting.

Answer:



Variable cost: 
Direct labor (600 hours × $14.50* per hour)…………………………………………  $  8,700 
Fixed cost: 
Equipment depreciation…………………………………………………………………    2,300 
Total department costs…………………………………………………………………… $11,000 
* $9,280 ÷ 640 hours