At the beginning of the period, the Cutting Department budgeted direct labor of $139,000, direct materials of $152,000 and fixed factory overhead of $13,000 for 7,700 hours of production. The department actually completed 11,700 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting

$461,920

Explanation:

The computation of the appropriate total budget for the department is shown below:-

Total cost = Direct labor + Direct material + Fixed Factory overhead

= $139,000 + $152,000 + $13,000

= $304,000

the cost of 1 hr of production = $304,000 ÷ 7,700

= $39.48

Therefore in order to extend it to 11,700 we need 4,000 more hrs of production = 4,000 × $39.48

= $157,920

Total budget for the department = $304,000 + $157,920

= $461,920

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