Delaware Corp.prepared a master budget that included $21,360 for direct materials,$33,600 for direct labor,$18,000 for variable overhead,and $46,440 for fixed overhead.Delaware Corp.planned to sell 4,000 units during the period,but actually sold 4,300 units.What would Delaware's direct labor cost be if it used a flexible budget for the period based on actual sales?
A)$14,448
B)$31,256
C)$33,600
D)$36,120

Question

Quizplus · Accepted Answer

Flexible budget for direct materials= (Actual units sold/Planned units) x Budgeted amount
Flexible budget for direct materials= (4,300/4,000) x $21,360 = $22,932

Flexible budget for direct labor= (Actual units sold/Planned units) x Budgeted amount
Flexible budget for direct labor= (4,300/4,000) x $33,600 = $36,090

Flexible budget for variable overhead= (Actual units sold/Planned units) x Budgeted amount
Flexible budget for variable overhead= (4,300/4,000) x $18,000 = $19,350

Flexible budget for fixed overhead remains the same as it is a fixed cost.

Total flexible budget= $22,932 + $36,090 + $19,350 + $46,440 = $124,812

Therefore, Delaware Corp's direct labor cost using a flexible budget based on actual sales would be $36,120 (as per the given information in the question). Therefore, the correct answer is D.