Question

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 You have just been hired by FAB Corparation, 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 your 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 After much effort and analysis, yau determined the following cost formulas and gathered the following actual cost data for March Actual Cost in Actual Cost in Cost Formula March Cost Formula March $16,900 plus $0.13 per machine-hour S 20,910 $16,900 plus $0.13 per machine-hour Utilities 20,910 utilities $38,200 plus $1.80 per Maintenance machine-hour $38,200 plus $1.80 per 62,600 Maintenance machine-hour 62,600 $ 8,300 Supplies Indirect $0.50 per machine-hour $94,700 plus $1.30 per machine-hour $0.50 per machine-hour $94,700 plus $1.30 per Supplies Indirect S 8,300 $117,700 $117,700 labor labor machine-hour Depreciation $68,300 70,000 Depreciation $68,300 $70,000 During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17000 machine-hours during March During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally plannedl to work 17,000 machine-hours during March Required: 1. Calculate the activity variances for March 2. Calculate the spending variances for 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. Complete this question by entering your answers in the tabs below. Required Required Required Required 1 2 2 Calculate the activity variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Calculate the spending variances for March. (Indicate the effect of each variance by selecting "F for favorable, "U" for unfavorable, and "None for no effect (i.e, zero variance). Input all amounts as positive values.) Show less A Show less A FAB Corporation Activity Variances FAB Coгporatioп Spending Variances For the Month Ended March 31 For the Month Ended March 31 Utilities Maintenance Supplies Indirect labor Depreciation Total Utilities Maintenance Supplies Indirect labor Depreciation Total Required 1 Required 2 Required 1 Required 2

Answer 1

1
	Planning budget	Flexible budget	Activity variances
Utilities	19110	18850	260	F
Maintenance	68800	65200	3600	F
Supplies	8500	7500	1000	F
Indirect labor	116800	114200	2600	F
Depreciation	68300	68300	0	None
Total	281510	274050	7460	F
2
	Actual cost	Flexible budget	Spending variances
Utilities	20910	18850	2060	U
Maintenance	62600	65200	2600	F
Supplies	8300	7500	800	U
Indirect labor	117700	114200	3500	U
Depreciation	70000	68300	1700	U
Total	279510	274050	5460	U