Question

Check my world Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost in March $ 21,220 67,300 9,000 $125,600 69,700 Cost Formula Utilities Maintenance $16,200 plus $0.14 per machine-hour $39,000 plus $1.50 per machine-hour $0.40 per machine-hour $94,800 plus $1.30 per machine-hour $68,000 Supplies Indirect labor Depreciation During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March Complete this question by entering your answers in the tabs below. Prev 1 of 2 Next

Answer 1

Answer is given below

FAB CORPORATION Activity Variances For the Month Ended March 31 Planning Flexible Variance Budget 23,000 Budget Machine hours Cost Utilities Maintenance Supplies Indirect Labor 21,000 2,000 F $280 F $3,000 F $800 F $2,600 F $0 $6,680 F $19,420 $73,500 $9,200 $124,700 $68,000 $294,820 $19,140 $70,500 $8,400 $122,100 Depreciation Total $68,000 $288,140 FAB CORPORATION Spending Variances For the Month Ended March 31 Actual Flexible Results Budget Variance Machine hours 21,000 21,000 0 Cost Utilities Maintenance Supplies Indirect Labor Depreciation $21,220 $67,300 $9,000 $125,600 $69,700 $292,820 $19,140 $70,500 $8,400 $122,100 $68,000 $2,080 U -$3,200 F $600 U $3,500 U $1,700 U $4,680 U $288,140 Total