The coating department of a parts manufacturing department coats various parts with an antirust, zinc-based material. The parts to be processed are loaded into baskets; the baskets are passed through a coating machine that dips the parts into the zinc solution. The machine then heats the parts to ensure that the coating bonds properly. All parts being coated are assigned a cost for the coating department based on the number of hours the parts spend in the coating machine. Prior to the beginning of the year, cost categories are accumulated by department (including the coating department). These cost categories are classified as either fixed or variable and then a flexible budget for the department is constructed. Given an estimate of machine hours for the next year, the coating department's projected cost per machine hour is computed.
Here are data for the last three operating years. Expected coating machine hours for 2017 are 16,000 hours.
COATING DEPARTMENT
Operating Data

Required:
a. Estimate the coating department's flexible budget for 2017. Explicitly state and justify the assumptions used in deriving your estimates.
b. Calculate the coating department's cost per machine hour for 2017?

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2014 2015 2016 Machine hours Coating materials Engineering support Maintenance 12,500 $ 51,375 27,962 35,850 15,200 8,400 $ 34,440 $ 62,624 31,300 36,200 27,105 147,288 49,327 34,295 35,930 28,904 78,372 47,430 8,820 Occupancy costs (square footage) Operator labor Supervision Utilities Total costs 27,502 115,750 46,500 12,875 $317,814 16,112 $369,956 $268,191