Question

steelcase inc. (scs) is one of the largest manufacturers of office furniture in the united states. in grand rapids, michigan, it assembles filing cabinets in an assembly department. assume the following information for the assembly department:

direct labor per filing cabinet: 18 minutes
supervisor salaries: $250,000 per month
depreciation: $18,500 per month
direct labor rate: $28 per hour

prepare a flexible budget for 70,000, 80,000, and 90,000 filing cabinets for the month ending february 28 in the assembly department, similar to exhibit 4.

steelcase inc.
assembly department budget
for the month ending february 28 (assumed data)
line item description | amount | amount | amount
units of production | 70,000 | 80,000 | 90,000
variable cost:

$

$

$

total variable cost | $ | $ | $
fixed cost:

$	$	$
$	$	$

total fixed cost | $ | $ | $
total department costs | $ | $ | $

Explanation:

Calculate variable cost per unit

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Calculate budget amounts for each production level

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Answer:

Line Item Description	Amount (70,000 units)	Amount (80,000 units)	Amount (90,000 units)
Variable cost:
Direct labor	\$588,000	\$672,000	\$756,000
Total variable cost	\$588,000	\$672,000	\$756,000
Fixed cost:
Supervisor salaries	\$250,000	\$250,000	\$250,000
Depreciation	\$18,500	\$18,500	\$18,500
Total fixed cost	\$268,500	\$268,500	\$268,500
Total department costs	\$856,500	\$940,500	\$1,024,500