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E24-10 Rensing Company has two production departments, Fabricating and Assembling

E24-10 Rensing Company has two production departments, Fabricating and Assembling
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ACCOUNTING

E24-10 (a,b) Rensing Company has two production departments, Fabricating and Assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain total budgeted costs. Separate graphs based on direct labor hours are used for each department. The graphs show the following.

At zero direct labor hours, the total budgeted cost line and the fixed cost line intersect the vertical axis at $40,000 in the Fabricating Department and $30,000 in the Assembling Department.

At normal capacity of 50,000 direct labor hours, the line drawn from the total budgeted cost line intersects the vertical axis at $150,000 in the Fabricating Department, and $110,000 in the Assembling Department.

Required:
a) State the total budgeted cost formula for each department.
b) Compute the total budgeted cost for each department, assuming actual direct labor hours
(c) Prepare the flexible budget graph for the Fabricating Department, assuming

 

FILE: MS WORD

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