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In the Bramble Corp., indirect labor is budgeted for $101250 and factory supervision is budgeted for $36000 at normal capacity of
150000 direct labor hours. If 220000 direct labor hours are worked, flexible budget total for these costs is:
a $184500.
b $175500.
c $137250.
d $201300.
To calculate the flexible budget total for indirect labor and factory supervision costs, we need to use the formula:
Flexible Budget = (Budgeted cost at normal capacity / Normal capacity) * Actual capacity
For indirect labor:
Budgeted cost at normal capacity = $101250
Normal capacity = 150000 direct labor hours
Actual capacity = 220000 direct labor hours
Flexible Budget for indirect labor = ($101250 / 150000) * 220000 = $147000
For factory supervision:
Budgeted cost at normal capacity = $36000
Normal capacity = 150000 direct labor hours
Actual capacity = 220000 direct labor hours
Flexible Budget for factory supervision = ($36000 / 150000) * 220000 = $52800
Flexible Budget Total = Flexible Budget for indirect labor + Flexible Budget for factory supervision
Flexible Budget Total = $147000 + $52800 = $199800
Therefore, the correct answer is not given in the options.
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To find the flexible budget total for indirect labor and factory supervision costs, we need to calculate the flexible budget rate per direct labor hour first.
The formula to calculate the flexible budget rate is:
Flexible Budget Rate = Budgeted Cost / Budgeted Hours
For indirect labor:
Flexible Budget Rate for Indirect Labor = Budgeted Indirect Labor / Budgeted Direct Labor Hours
Flexible Budget Rate for Indirect Labor = $101,250 / 150,000
Flexible Budget Rate for Indirect Labor = $0.675
For factory supervision:
Flexible Budget Rate for Factory Supervision = Budgeted Factory Supervision / Budgeted Direct Labor Hours
Flexible Budget Rate for Factory Supervision = $36,000 / 150,000
Flexible Budget Rate for Factory Supervision = $0.24
Now, to find the flexible budget total, we need to multiply the flexible budget rate by the actual direct labor hours.
Flexible Budget Total = (Flexible Budget Rate for Indirect Labor + Flexible Budget Rate for Factory Supervision) * Actual Direct Labor Hours
Flexible Budget Total = ($0.675 + $0.24) * 220,000
Flexible Budget Total = $0.915 * 220,000
Flexible Budget Total = $199,230
Therefore, the flexible budget total for indirect labor and factory supervision costs is $199,230, which is closest to option d) $201,300.