Steelcase Inc. is one of the largest manufacturers of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Assembly. Assume the following information for the Assembly Department: Direct labor per filing cabinet 30 minutes
Supervisor salaries $150,000 per month
Depreciation $31,000 per month
Direct labor rate $15 per hour
Steelcase Inc-Assembly Department
Flexible Production Budget
August 2016 (assumed data)
Units of production 18,000 20,000 22,000
Variable cost:
Direct labor
Total variable cost
Fixed cost:
Supervisor salaries
Depreciation
Total fixed cost
Total department cost
Prepare a flexible budget for 12,000, 15,000, and 18,000 filing cabinets for the month of August, similar to Exhibit 5, assuming that inventories are not significant.

Note: Per unit Direct labour cost = $15 /60 minutes * 30 minutes

=$7.5

                                   Steelcase Inc

                         Assembly Department

          Flexible budget for the month of August, 2016

Unit of Production            Per Unit         No. of filling cabinet

                                                               18,000   20,000    22,000

Variable cost

Direct labour cost               7.5            135,000  150,000  165,000

Total variable cost A                           135,000  150,000  165,000

Fixed cost

Supervisor salaries                               150,000  150,000   150,000

Depreciation                                          31,000    31,000     31,000

Total fixed cost B                                  181,000  181,000  181,000

Total Departmental Cost A+B             316,000  331,000  346,000

Per unit Department Cost                    17.55        16.55      15.72

Note: Per unit department cost = Total department cost / No of filling cabinet