In the Sheridan Company, indirect labor is budgeted for $68000 and factory supervision is budgeted for $34000 at normal capacity of 170000 direct labor hours

Accounting Aug 14, 2020

In the Sheridan Company, indirect labor is budgeted for $68000 and factory supervision is budgeted for $34000 at normal capacity of 170000 direct labor hours. If 190000 direct labor hours are worked, flexible budget total for these costs is

Expert Solution

Computation of Flexible Budget Total for these Costs:

Flexible Budget Total = Variable Cost at 190,000 Direct labor Hours + Fixed Cost

Here,

Variable Cost = $68,000/170,000 = $0.40 per direct labor hour

Fixed Cost = Factory Supervision = $34,000

Flexible Budget Total = $ 0.40 per Direct labor Hour * 190,000 Direct labor Hours+ $ 34,000

= $76,000+ $34,000

Flexible Budget Total = $110,000

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