A Flexible Budget Graph for the Assembly Department Shows the Following

question 74

Essay

A flexible budget graph for the Assembly Department shows the following:
1. At zero direct labor hours the total budgeted cost line intersects the vertical axis at $120000.
2. At normal capacity of 50000 direct labor hours the line drawn from the total budgeted cost line intersects the vertical axis at $360000.
Instructions
Develop the budgeted cost formula for the Assembly Department and identify the fixed and variable costs.

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Definitions:

Variable Manufacturing

Costs in manufacturing that vary with the level of production output, such as raw materials and labor costs.

Factory Overhead

All indirect costs associated with manufacturing, such as utilities, maintenance, and depreciation of equipment, excluding direct materials and direct labor.

Direct Labor

Direct labor refers to the work of employees directly involved in the manufacturing of products.

Direct Material

Raw materials that are consumed in the manufacturing process, directly incorporated into the finished product.