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 $48,000 per year (A total of 12,000 welding hours are supplied by the six workers.) Welding supplies: $400 per job Welding hours: 4 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: $48,000 Salaries: $302,400 Parts and supplies: $1,135,200 Required: 1. Prepare a flexible budget formula for the welding activity using welding hours as the driver. Welding cost x 100 X Feedback Check My Work 1. Activity flexible budgeting is the prediction of what activity costs will be as activity output changes. 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. Activity Foy Company Activity-Based Performance Report Actual Cost Budgeted Cost (95% level) Welding: Fixed cost Variable cost x x x x Feedback Check My Work Budget Variance Variance x x 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 48,000 130 X