Chapter 12 HW

1. CEX.12.01
2. CEX.12.02
3. CEX.12.03
4. CEX.12.04

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   Question Content Area

   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 $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:

   Question Content Area

   1. Prepare a flexible budget formula for the welding activity using welding hours as the driver.

   Welding cost

   =

   $fill in the blank 20e72e08ffb306a_1

   +

   $fill in the blank 20e72e08ffb306a_2 X

   Question Content Area

   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 (90% level)	Budget Variance	Variance
   Welding:
   Fixed cost	$- Select -	$- Select -	$- Select -	FUNA
   Variable cost	- Select -	- Select -	- Select -	FUNA

   Question Content Area

   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

   =

   $fill in the blank 7ff439ff3f9afcc_1

   +

   $fill in the blank 7ff439ff3f9afcc_2 X