Steelcase Inc. is one of the largest manufacturers of office furniture in the Un

Question

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 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

Depreciation ...................................................... ………………….$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 that inventories are not significant.

Explanation / Answer

Flexible Budgets for Steelcase Inc.for the month of October:

Direct labor cost =18/60 x 23 = $ 6.9 per cabinet

12,000 filing cabinets 15,000 filing cabinets 18,000 filing cabinets Direct material cost @ 50 lbsx 1.85 per pound = $ 92.50 per cabinet 1,110,000 1,387,500 1,665,000

Direct labor cost =18/60 x 23 = $ 6.9 per cabinet

82,800 103,500 124,200 Supervisor salaries 160,000 160,000 1,60,000 Depreciation 25,000 25,000 25,000 Total cost 1,377,800 1,676,000 1,974,200

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