Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

تمرين 43

Activity-Based Flexible Budgeting
Foy Company has a welding activity and wants to develop a flexible budget formula for the activity. The following resources are used by the activity:
• Four welding units, with a lease cost of $12,000 per year per unit
• Six welding employees each paid a salary of $50,000 per year (A total of 9,000 welding hours are supplied by the six workers.)
• Welding supplies: $300 per job
• Welding hours: Three hours used per job
During the year, the activity operated at 90 percent of capacity and incurred the actual activity and resource costs, shown on page 664.
• Lease cost: $48,000
• Salaries: $315,000
• Parts and supplies: $805,000
Required:
1. Prepare a flexible budget formula for the welding activity using welding hours as the driver.
2. Prepare a performance report for the welding activity.
3. What if welders were hired through outsourcing and paid $30 per hour (the welding equipment is provided by Foy)? Repeat Requirement 1 for the outsourcing case.