Question

Flexible Budget for Assembly Department

Steelcase Inc. (SCS) is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it assembles filing cabinets in an Assembly Department. Assume the following information for the Assembly Department:

Direct labor per filing cabinet	18 minutes
Supervisor salaries	$250,000 per month
Depreciation	$18,500 per month
Direct labor rate	$28 per hour

Prepare a flexible budget for 70,000, 80,000, and 90,000 filing cabinets for the month ending February 28 in the Assembly Department, similar to Exhibit 5.

Steelcase Inc.
Assembly Department Budget
For the Month Ending February 28 (assumed data)
Units of production	70,000	80,000	90,000
Variable cost:
	$	$	$
Total variable cost	$	$	$
Fixed cost:
	$	$	$
Total fixed cost	$	$	$
Total department costs	$	$	$

Answer 1

Answer-

Steelcase Inc.
Assembly Departmental Budget
For the month of February 28
	Filling Cabinets
Units in production (a)	70000	80000	90000
Direct Labor per filing cabinet (b)	18 minutes	18 minutes	18 minutes
Total time (in minutes) [c=a*b]	1260000	1440000	1620000
Conversion minutes into hours (d)	1260000 minutes/60 minutes=21000 hours	1440000 minutes/60 minutes=24000 hours	1620000 minutes/60 minutes =27000 hours
1 Hours = 60 minutes
Direct labor rate (e)	$28 per hour	$28 per hour	$28 per hour
Direct labor cost (f=d*e)	588000	672000	756000
Supervisor salaries $ (g)	250000	250000	250000
Depreiation $ (h)	18500	18500	18500
Total fixed costs (i)	268500	268500	268500
Total department costs $ (j=f+i)	856500	940500	1024500