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 following actual activity and resource costs:

° 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 | for the outsourcing case.

LO1