Direct materials cost = $5X, where X = Direct labor hours

Direct labor cost = $15X, where X = Direct labor hours

Power cost = $68,000 + 0.9Y, where Y = Machine hours

Setup cost = $98,000 + $400Z, where Z = Number of setups

The actual measures for each of the activity drivers are as follows:

Direct labor hours	20,000
Machine hours	90,000
Number of setups	110

• 5.

Using the newly developed formulas, calculate what the costs should have been for the actual measures of activity for each of the four manufacturing activities. What are the total after-the-fact budgeted manufacturing costs? How does this compare with the total expected costs calculated in Requirement 1?

• 6.

Prepare a performance report using the flexible budget outcomes in Requirement 5. Does the report validate the concerns expressed by Amy about the traditional performance report? Explain.

• 7.

Assume that the following activity usage is provided for each of the two products:

Using the total budgeted costs calculated in Requirement 5, calculate a manufacturing cost rate per direct labor hour and use this rate to assign the manufacturing costs to each product line.

Using the budgeted costs for each activity calculated in Requirement 5, calculate an activity rate for each of the four activities and use these rates to assign manufacturing costs to each product line. Round each rate calculation to the nearest dollar except for power rate; round it to the nearest cent

Compare the product line cost assignments made in 9a and 9b. Which do you consider to be the more accurate? Explain.

Product	Direct labor hours	Machine hours	Setups
Crimping pliers	10,000	55,000	70
Crown scissors	10,000	35,000	40