One-month budget allowances for the Finishing Department of Salem Corporation follow:
Activity Base: 900 direct labor hours per month at normal capacity, which is 90% of rated capacity

Required:
Prepare a flexible budget for the Finishing Department at the 80%, 90%, 100%, and 110% rated capacity levels. Fixed costs are expected to be constant from 80% to 110% of capacity.

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Variable Rate per Labor Hour $1.50 Fixed Cost 4,000.00 2,500.00 Category of Cost Supervision Factory supplies Power .. Rework operations... Payroll taxes.. Repair and maintenance... Property insurance . 900.00 500.00 200.00 800.00 600.00 700.00 300.00 2,200.00 2.35 75 .50 1.30 40 … Vacation pay... Employee pension costs.1,200.00 Employee health plan.. Machinery depreciation. Water and heat.. 1,800.00 1,000.00 600.00 1,000,00 Building occupancy General factory.. Total cost.. 1.500.00 $19,800.00 .20 $7.00 Summary nannsrnun$19,800.00 6,300.00 Total cost at normal capacity.$26.100.00 Fixed cost Variable cost (900 direct labor hours x $7.00 Factory overhead rate for Finishing Department at 29.00per direct labor hour normal capacity ($26,100/900 hours)