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:
During the year, the activity operated at 80 percent of capacity and incurred the following actual activity and resource costs.
Required:
1. Prepare a flexible budget formula for the welding activity using welding hours as the driver.
Welding cost | = | $ | + | $ X |
2. Prepare a performance report for the welding activity. In the last column of Foy Company Activity-Based Performance Report, if variance amount is unfavorable enter "U" , enter "F", if it is Favorable and enter "NA" if there is no variance.
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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.
Welding cost | = | $ | + | $ X |
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