Flexible Budget for Fabrication Department Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Assembly. Assume the following information for the Assembly Department: Direct labor per filing cabinet 30 minutes Supervisor salaries $180,000 per month Depreciation $15,000 per month Direct labor rate $24 per hour Prepare a flexible budget for 10,000, 25,000, and 40,000 filing cabinets for the month of August, similar to Exhibit 5, assuming that inventories are not significant. Enter all amounts as positive numbers. Steelcase Inc. - Assembly Department Month Ending August 31 (Assumed Data) Units of production 10,000 25,000 40,000 Variable cost: Direct labor $ $ $ Fixed cost: Supervisor salaries $ $ $ Depreciation Total fixed cost $ $ $ Total department cost $ $ $ Feedback
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Flexible Budget for Fabrication Department
Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Assembly. Assume the following information for the Assembly Department:
| Direct labor per filing cabinet | 30 minutes |
| Supervisor salaries | $180,000 per month |
| $15,000 per month | |
| Direct labor rate | $24 per hour |
Prepare a flexible budget for 10,000, 25,000, and 40,000 filing cabinets for the month of August, similar to Exhibit 5, assuming that inventories are not significant. Enter all amounts as positive numbers.
| Steelcase Inc. - Assembly Department | |||
| Month Ending August 31 | |||
| (Assumed Data) | |||
| Units of production | 10,000 | 25,000 | 40,000 |
| Variable cost: | |||
| Direct labor | $ | $ | $ |
| Fixed cost: | |||
| Supervisor salaries | $ | $ | $ |
| Depreciation | |||
| Total fixed cost | $ | $ | $ |
| Total department cost | $ | $ | $ |
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