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Part 3 Moving Inc. wants to develop an activity flexible budget for the activity of moving materials. Moving Inc. uses forklifts to move materials from
Part 3 | ||||||||||||||||
Moving Inc. wants to develop an activity flexible budget for the activity of moving materials. | ||||||||||||||||
Moving Inc. uses forklifts to move materials from receiving to storeroom and then to production. | ||||||||||||||||
The forklifts are also used to move material from storeroom to the production area, which the company considers one move. | ||||||||||||||||
Crates are used to store the parts and are emptied only when used in production. | ||||||||||||||||
The crates are disposed of after a move from receiving to the storeroom to production are complete. | ||||||||||||||||
8 | The forklifts are leased | $18,000 | per year per forklift | |||||||||||||
25 | Forklift operators | $50,000 | year average salary | |||||||||||||
Each crate costs | $1.80 | |||||||||||||||
Fuel costs for Forklift | $3.60 | per gallon | ||||||||||||||
A gallon is used for | 10 | moves | ||||||||||||||
Forklifts can make | 3 | Moves per hour | ||||||||||||||
Forklifts are used | 280 | Days per year | ||||||||||||||
Each operator works | 40 | Hours per week | ||||||||||||||
Required: | ||||||||||||||||
1. Prepare a flexible budget like exhibit 12.4 for the activity of moving materials, but you will use the number of moves as the activity driver. | ||||||||||||||||
Use | 60,000 | moves and | 80,000 | moves | ||||||||||||
2. What if the actual costs incurred were the amounts below for 60,000 moves. | ||||||||||||||||
Prepare an activity-based performance report like exhibit 12.6 to present a comparison of actual to budget with a budget variance determine. | ||||||||||||||||
You must also designate U or F if there is a variance. If there is no variance you can leave the designation blank, since the variance of zero is not U or F. You must use the IF Function to designate U or F to earn credit. | ||||||||||||||||
Activity | Actual cost | |||||||||||||||
Salaries | $1,290,000 | |||||||||||||||
Leases | 144,000 | |||||||||||||||
Crates | 118,000 | |||||||||||||||
Fuel | 24,000 | |||||||||||||||
3. Explain what type of value that the moving activity provides the company. Provided a recommendation on what the company should attempt to do with this activity. |
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