Astec Company is preparing budgets for the coming year. 120,000 labour hours will be 100% level of expected productive

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Astec Company is preparing budgets for
the coming year. 120,000 labour hours will be 100% level of
expected productive time, but a flexible budget at 90%, 110% and
120% is required so that cost allowances can be set for these
possible levels.
Budgeted costs
details
Fixed Costs per
annum
$
Depreciation
22,000
Staff
salaries
43,000
Insurances
9,000
Rent and
Rates
12,000
Variable Costs
Power
$0.30 per direct labour hour
Consumables
$0.05 per direct labour hour Direct
labour
$3.50
per direct labour hour
Semi-Variable
Costs
Analysis of past records, adjusted to
eliminate the effect on inflation shows the following:
Direct labour
hours
Total Semi-variable cost
Last year
6
110,000
$330,000
Year
5
100,000
305,000
Year
4
90,000
280,000
Year
3
87,000
272,500
Year
2
105,000
317,500
Year
1
80,000
255,000
Required:
A Cost Budget at 100% and flexed to
show cost allowances at 90%, 110% and 120%