Billy Adams, controller for Westcott, Inc., prepared the following budget for manufacturing costs at two different levels of activity for 2001:

During 2001, Westcott worked a total of 80,000 direct labor hours, used 250,000 machine hours, made 32,000 moves, and performed 120 batch inspections. The following actual costs were incurred:

Westcott applies overhead using rates based on direct labor hours, machine hours, number of moves, and number of batches. The second level of activity (the right column in the preceding table) is the practical level of activity (the available activity for resources acquired in advance of usage) and is used to compute predetermined overhead pool rates.
Required:
1. Prepare a performance report for Westcott's manufacturing costs in 2001.
2. Assume that one of the products produced by Westcott is budgeted to use 10,000 di¬
rect labor hours, 15,000 machine hours, and 500 moves and will be produced in 5 batches.
A total of 10,000 units will be produced during the year. Calculate the budgeted unit manufacturing cost.
3. One of Westcott's managers said the following: "Budgeting at the activity level makes a lot of sense. It really helps us manage costs better. But the above budget really needs to provide more detailed information. For example, I know that the moving materials activity involves the use of forklifts and operators, and this information is lost when only the total cost of the activity for various levels of output is reported. We have 4 forklifts, each capable of providing 10,000 moves per year. We lease these forklifts for 5 years, at $10,000 per year. Furthermore, for our 2 shifts, we need up to 8 operators if we run all 4 forklifts. Each operator is paid a salary of $30,000 per year. Also, I know that fuel costs us about $0.25 per move."
Based on these comments, explain how this additional information may help West¬
cott better manage their costs. Also, assuming that these are the only three items, expand the detail of the flexible budget for moving materials to reveal the cost of these three re¬
source items for 20,000 moves and 40,000 moves, respectively. You may wish to review the concepts of flexible, committed, and discretionary resources found in Chapter 3.

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Driver: Direct Labor Hours Direct materials Direct labor Depreciation (plant) Subtotal Level of Activity 50,000 $ 300,000 200,000 100,000 $ 600,000 100,000 $ 600,000 400,000 100,000 $1,100,000 Driver: Machine Hours Maintaining equipment Machining Subtotal Driver: Material Moves Moving materials Driver: Number of Batches Inspected Inspecting products Total 200,000 $ 360,000 112,000 $ 472,000 300,000 $ 510,000 162,000 $ 672,000 20,000 40,000 $ 165,000 $ 290,000 100 $ 125,000 $1,362,000 200 $ 225,000 $2,287,000