Refer to DCdesserts.com’s activity-based flexible budget in Exhibit 11–11. Suppose that the company’s activity in June is described as follows:

In Exhibit 11–11

Process hours.............................................................. 9,000

Production runs.......................................................... 12

New products tested.................................................. 40

Direct material handled (pounds)............................. 30,000

Required:

1. Determine the flexible budgeted cost for each of the following:

a. Indirect material

b. Utilities

c. Inspection

d. Test kitchen

e. Material handling

f. Total overhead cost

2. Compute the variance for setup cost during the month, assuming that the actual setup cost was $3,500:

a. Using the activity-based flexible budget.

b. Using DCdesserts.com’s conventional flexible budget (Exhibit 11–3).

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DCDESSERTS.COM Monthly Flexible Overhead Budget Budgeted Cost Cost Pool I (cost driver: procoss hours) .. Level of Activity 7,500 6,000 9,000 Indirect material: $ 12,000 2,000 $ 15,000 2,500 $ 18,000 Nonstick cooking spray Waxed paper Other paper products . Miscellanecus supplies 3,000 2,000 2,500 3,000 6,000 7,500 5,000 9,000 ........... 6,000 Indirect labor: maintenance 4,000 ...................... Utlities: 3,750 1,250 Electricity Natural gas 3,000 4,500 1,000 1,500 $ 30,000 $ 37,500 $ 45,000 Total of cost pool | Cost Pool II (cost driver: production runs). 16 12 Indirect labor: $ 2,200 $ 3,300 $ 4,400 6,000 Inspection. Setup . 3,000 4,500 $ 5,200 $ 7,800 $ 10,400 Total of cost pool || Cost Pool II (cost driver: new products tested) 20 30 40 $ 1,200 $ 1,200 $ 1,800 $ 1,800 $ 2,400 $ 2,400 Test kitchen Total of cost pool I 20,000 $ 2,000 $ 2,000 Cost Pool V (cost driver: pounds of material handled) Material handling . 30,000 $ 3,000 $ 3,000 40,000 $ 4,000 $ 4,000 . Total of cost pool Cost Pool V (facility level costs) Indirect labor: production supervisors Depreciation: plant and equipment Insurance and property taxes . $ 6,000 500 $ 6,000 $ 6,000 500 500 100 100 100 ......... ...... $ 6,600 $ 6,600 $56,700 $ 6,600 Total of cost pool V . Total overhead cost. $45,000 $68,400