Moving Inc. wants to develop an activity flexible budget for the activity of moving materials. Moving Inc. uses 8 forklifts to move materials from receiving to stores. The forklifts are also used to move materials from stores to the production area. The forklifts are obtained through an operating lease that costs $19,000 per year per forklift. Moving, Inc. employs 25 forklift operators who receive an average salary of $50,000 per year, including benefits. Each move requires the use of a crate. The crates are disposed of after a move from receiving to the storeroom to production are complete. Each crate costs $1.80. Fuel for a forklift costs $3.60 per gallon. A gallon of gas is used every 10 moves. Forklifts can make 3 moves per hours and are available for 280 days per year. Each operator works 40 hours per week.

	COST FORMULA		MOVES PER HOUR
	Fixed	Variable	70,000	90,000
Salaries	$1,250,000	-	$1,250,000	$1,250,000
Leases	$152,000	-	152,000	$152,000
Crates	-	$1.80	126,000	162,000
Fuel	-	$0.36	25,200	32,400
Total	$1,402,000	$2.16	$1,553,200	$1,596,400
	Actual Costs	Budgeted Costs	Budget Variance
Salaries	$1,290,000	$1,250,000	$40,000	U
Leases	144,000	152,000	8,000	F
Crates	117,000	126,000	9,000	F
Fuel	24,000	25,200	1,200	F
Total	$1,575,000	$1,553,200	$21,800	U

1. Explain what type of value that the moving activity provides the company. Provide a recommendation on what the company should attempt to do with this activity.