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Indigo Company has two production departments, Fabricating and Assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain total budgeted costs. A separate graph based on direct labor hours is used for each department. The graphs show the following. 1. 2. (a) At zero direct labor hours, the total budgeted cost line and the fixed-cost line intersect the vertical axis at $60,000 in the Fabricating Department and $48,000 in the Assembling Department. At normal capacity of 60,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $192,000 in the Fabricating Department and $144,000 in the Assembling Department. State the total budgeted cost equation for each department. (Round cost per direct labor hour to 2 decimal places, e.g. 1.25.) Fabricating Department Assembling Department = = $ LA tA $ total total v + ✓of $ of $

Indigo Company has two production departments, Fabricating and Assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain total budgeted costs. A separate graph based on direct labor hours is used for each department. The graphs show the following. 1. 2. (a) At zero direct labor hours, the total budgeted cost line and the fixed-cost line intersect the vertical axis at $60,000 in the Fabricating Department and $48,000 in the Assembling Department. At normal capacity of 60,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $192,000 in the Fabricating Department and $144,000 in the Assembling Department. State the total budgeted cost equation for each department. (Round cost per direct labor hour to 2 decimal places, e.g. 1.25.) Fabricating Department Assembling Department = = $ LA tA $ total total v + ✓of $ of $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Indigo Company has two production departments, Fabricating and Assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain total budgeted costs. A separate graph based on direct labor hours is used for each department. The graphs show the following. 1. 2. (a) At zero direct labor hours, the total budgeted cost line and the fixed-cost line intersect the vertical axis at $60,000 in the Fabricating Department and $48,000 in the Assembling Department. At normal capacity of 60,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $192,000 in the Fabricating Department and $144,000 in the Assembling Department. State the total budgeted cost equation for each department. (Round cost per direct labor hour to 2 decimal places, e.g. 1.25.) Fabricating Department Assembling Department = = CA total total + of $ of $
Transcribed Image Text:Indigo Company has two production departments, Fabricating and Assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain total budgeted costs. A separate graph based on direct labor hours is used for each department. The graphs show the following. 1. 2. (a) At zero direct labor hours, the total budgeted cost line and the fixed-cost line intersect the vertical axis at $60,000 in the Fabricating Department and $48,000 in the Assembling Department. At normal capacity of 60,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $192,000 in the Fabricating Department and $144,000 in the Assembling Department. State the total budgeted cost equation for each department. (Round cost per direct labor hour to 2 decimal places, e.g. 1.25.) Fabricating Department Assembling Department = = CA total total + of $ of $
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