Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $14,000 per year per unit

Six welding employees each paid a salary of $54,000 per year (A total of 9,000 welding hours are supplied by the six workers.)

Welding supplies: $300 per job

Welding hours: 3 hours used per job

During the year, the activity operated at 95 percent of capacity and incurred the following actual activity and resource costs.

Lease cost: $56,000

Salaries: $340,200

Parts and supplies: $849,600

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 select "U" , select "F", if it is Favorable and select "NA" if there is no variance.

Foy Company
Activity-Based Performance Report
Activity Actual Cost Budgeted Cost (95% level) Budget Variance Variance
Welding:
Fixed cost $ $ $
Variable cost

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting Principles And Applications

Authors: Horace R. Brock

5th Edition

0070081522, 978-0070081529

More Books

Students also viewed these Accounting questions

Question

I need help solving this problem

Answered: 1 week ago

Question

Be able to differentiate between arbitration and mediation

Answered: 1 week ago

Question

Understand how arbitrators are credentialed and selected

Answered: 1 week ago

Question

Appreciate the advantages of arbitration

Answered: 1 week ago