lexible Budget for Assembly Department Cabinaire Inc. 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 30 minutes Supervisor salaries $135,000 per month Depreciation $20,000 per month Direct labor rate $21 per hour Prepare a flexible budget for 8,000, 10,000, and 12,000 filing cabinets for the month of August in the Assembly Department, similar to Exhibit 5. Cabinaire Inc-Assembly DepartmentFlexible Production BudgetFor the Month Ending August 31 (assumed data)
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 Assembly Department
Cabinaire Inc. 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 | 30 minutes |
| Supervisor salaries | $135,000 per month |
| $20,000 per month | |
| Direct labor rate | $21 per hour |
Prepare a flexible budget for 8,000, 10,000, and 12,000 filing cabinets for the month of August in the Assembly Department, similar to Exhibit 5.
Cabinaire Inc-Assembly DepartmentFlexible Production BudgetFor the Month Ending August 31 (assumed data)
| Units of production | 8,000 | 10,000 | 12,000 |
| Variable cost: | |||
| Direct labor | |||
| Fixed cost: | |||
| Supervisor salaries | |||
| Depreciation | |||
| Total fixed cost | |||
| Total department cost | |||
Flexible budget:
It is the budget which adjusts itself with the level of activity. In other words, flexible budget is a budget which is prepared by adjusting the variable cost as per the number of units produce while keeping the fixed cost same.
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