The Cameron Corporation uses an ABC system, with the following manufacturing support (i.e., factory overhead) costs:

Unit-level support costs:

Electricity ............. $1.00 per machine hour

Maintenance labor .......... $1.50 per machine hour

Batch-level support costs:

Production set-ups .......... $300 per setup

Incoming Inspection ......... $100 per purchase order

Product-level support costs:

Engineering support .........$2,000 per engineering change order (ECO)

Facilities-level support costs:

Depreciation—plant ............ $15,000 per month

Insurance and property taxes .......$5,000 per month

Estimated activity levels for			Output Levels (MH)
possible output levels:			4,000	5,000	6,000
Production set-ups			20	24	28
Purchase orders			10	15	20
ECOs			12	15	18

The plant manager has asked you to prepare flexible (control) budgets for three levels of possible activity for the coming month: 4,000 machine hours, 5,000 machine hours, and 6,000 machine hours. Associated activity levels for manufacturing support costs are as follows:

Required

1. Use an Excel spreadsheet to prepare a flexible (control) budget for the following three output levels:

(a) 4,000 machine hours,

(b) 5,000 machine hours,

(c) 6,000 machine hours.

2. How do these flexible budgets differ from those prepared under a traditional approach (e.g., for the case where a single activity measure, machine hours, is used to construct the flexible (control) budget)?