Steelcase Inc. is one of the largest manufactures of office furniture in the United States. In Grand Rapids, Michigan, it produces filing cabinets in two departments: Fabrication and Trim Assembly. Assume the following information for the Fabrication Department:
Steel per filing cabinet ........... 50 pounds
Direct labor per filing cabinet ......... 18 minutes
Supervisor salaries .............. $ 160,000 per month
Deprecation ................ $25,000 per month
Direct labor rate ............... $23 per hour
Steel cost ................. $1.85 per pound
Prepare a flexible budget for 12,000, 15,000 and 18,000 filing cabinets for the month of October 2012, similar to Exhibit 5, assuming inventories are not significant.
 

A

B

C

D

1

STEELCASE INC. x FABRICATION DEPARTMENT

2

Flexible Production Budget

3

October 2012

4

(assumed data)

5

 Units of production  

        12,000

         15,000

18,000

6

7

 Variable cost:

8

     Direct labor

  $     82,800¹

   $  103,500²

   $ 124,200³

9

     Direct materials

    1,110,000⁴

   1,387,500⁵

   1,665,000⁶

10

         Total variable cost

  $ 1,192,800

   $ 1,491,000

   $ 1,789,200

11

12

 Fixed cost:

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     Supervisor salaries 

  $   160,000

   $  160,000

   $  160,000

14

     Depreciation          

        25,000

         25,000

        25,000

15

         Total fixed cost 

  $   185,000

   $  185,000

   $  185,000

16

 Total department cost           

  $ 1,377,800

   $ 1,676,000

   $ 1,974,200

17

18

 ¹12,000 × 18/60 × $23

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 ²15,000 × 18/60 × $23

20

 ³18,000 × 18/60 × $23

21

 ⁴12,000 × 50 × $1.85

22

 ⁵15,000 × 50 × $1.85

23

 ⁶18,000 × 50 × $1.85