Question

For Crafton Company, indirect labor is budgeted for $57,000 and factory supervision is budgeted for $65,000 at normal capacity of 142,500 direct labor hours. If 145,000 direct labor hours are worked, how much is the flexible budget for these costs

Answer 1

Answer:

$124,700

Explanation:

Indirect labor budgeted is $57,000

Factory supervision is $65,000

The normal capacity is 142,500

Direct labor 145,000

Therefore the flexible budget can be calculated as follows

= 57,000+65,000/142,500

= 122,000/142,500

= 0.86

0.86×145,000

= 124,700

Hence the flexible budget is $124,700