Earth, Inc $\quad\$ 3.00 \text { per machine hour}$ Maintenance $\quad\$ 2.50 \text { per machine hour}$

question 72

Essay

Earth, Inc., is developing flexible budgets for each department as part of its plan to use standard costs. Normal monthly volume in the Sifting Department is 50,000 direct labor hours. At normal volume, department fixed costs include $70,000 for power and $40,000 for maintenance, and salaries of $70,000 per month. Indirect variable labor is $120,000, which involves 15,000 hours of indirect labor at $8 per hour. Other variable costs in the Sifting Department are as follows:
Tools and supplies $\quad\$ 3.00 \text { per machine hour}$
Maintenance $\quad\$ 2.50 \text { per machine hour}$
Power $\quad\$ 3.50 \text { per machine hour}$
Depreciation $\quad\$ 4.50 \text { per machine hour}$ Normal volume is 40,000 machine hours per month. The company uses a service (or usage) hours method to depreciate its fixed assets.
a. Prepare a departmental flexible overhead budget for 30,000 machine hours and for 40,000 machine hours.
b. Did you treat depreciation expense as a variable or a fixed cost? Defend your approach.

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Definitions:

Homophobia

A range of negative attitudes and feelings toward homosexuality or people who are identified or perceived as being homosexual.

Ethnocentrism

The belief in the superiority of one's own ethnic group, culture, or nationality, often resulting in prejudice and disregard for other cultures.

Workplace Diversity

The inclusion of a variety of differences among people in an organization, including race, gender, age, culture, and other demographic attributes.

Sexual Orientation

A person's emotional, romantic, or sexual attraction to individuals of the same gender, a different gender, both, or neither.