Answer
Separate costs into fixed and variable. Determine the variable cost per unit (or per driver) and the total fixed cost. To flex to actual activity, multiply variable cost per unit by actual units and add the fixed cost. This gives the allowed cost for the actual level of output, used as the control benchmark.
Flexed cost = (Variable cost/unit x actual units) + Fixed cost.
E.g., ($5 x 12,000) + $20,000 = $80,000.Real-world example At 12,000 units, the flexed budget allows $80,000, against which actual cost is compared.