Response to the following problem:
|
Activity
|
Driver
|
Fixed Cost
|
Variable Rate
|
|
Maintenance
|
Machine hours
|
$50,000
|
$ 1.80
|
|
Machining
|
Machine hours
|
25,000
|
3.00
|
|
Setting up
|
Setups
|
-
|
2,100
|
|
Purchasing
|
Purchase Orders
|
75,000
|
7.00
|
Jarend has found that the following driver levels are associated with two different levels of production.
Driver 40,000 units 60,000 units
|
Machine hours
|
60,000
|
90,000
|
|
Setups
|
50
|
70
|
|
Purchase orders
|
12,000
|
18,000
|
Required:
Prepare an activity-based flexible budget for 40,000 units and 60,000 units.