Sherrer Company has two production departments: fabricating and assembling. At a department managers' meeting, the controller uses flexible budget graphs to explain the total budgeted costs. Separate graphs based on direct labour hours are used for each department. The graphs show the following:

1. At zero direct labour hours, the total budgeted cost line and the fixed cost line intersect the vertical axis at $50,000 in the fabricating department and at $40,000 in the assembling department.

2. At normal capacity of 50,000 direct labour hours, the line drawn from the total budgeted cost line intersects the vertical axis at $180,000 in the fabricating department, and $135,000 in the assembling department.

Instructions

(a) State the total budgeted cost formula for each department.

(b) Calculate the total budgeted cost for each department, assuming actual direct labour hours worked were 53,000 and 47,000 in the fabricating and assembling departments, respectively.

(c) Prepare the flexible budget graph for the fabricating department, assuming the maximum direct labour hours in the relevant range is 100,000. Use increments of 10,000 direct labour hours on the horizontal axis and increments of $50,000 on the vertical axis.