The Mazdiak Company has converted to an activity-based costing (ABC) system, as discussed in Chapter 4. Accordingly, the company prepares a flexible budget based on the four activity costs for indirect production costs (factory overhead):

Activity levels for the company for August were 10,000 units with 5,000 machine hours, 40 batches, and 3 design changes.

a. What would be the total flexible budget for the month of August?

b. By using an activity-based budget and tracking actual indirect production costs (overhead) by activities, would Mazdiak be able to better identify non–value-added costs as candidates for improvements? Discuss. Be specific.

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Unit-level support costs (e.g., electricity, maintenance) Batch-level support costs (setups, handling, and inspections) Product-level support costs (design changes) Facilities-level support costs (factory depreciation, insurance, and taxes) $4 per machine hour $600 per batch $3,000 per change $50,000 per month