Working Columns |
Flexible Budget = ANSWER |
||||||
Machine hours |
17,000 |
||||||
[ Fixed + (Var x Actual units)] |
|||||||
Fixed part |
+( |
Variable part |
x |
Actual/Planned units |
) |
||
Utilities |
$16,500 |
+( |
$ 0.13 |
x |
17000 |
) |
$18,710 |
Maintenance |
$39,000 |
+( |
$ 1.30 |
x |
17000 |
) |
$61,100 |
Supplies |
$0 |
+( |
$ 0.30 |
x |
17000 |
) |
$5,100 |
Indirect Labor |
$94,500 |
+( |
$ 1.80 |
x |
17000 |
) |
$125,100 |
Depreciation |
$67,600 |
+( |
$ - |
x |
17000 |
) |
$67,600 |
Total Expenses |
$217,600 |
+( |
$4 |
x |
17000 |
) |
$277,610 |
Actual result |
Spending Variance |
Flexible Budget |
||
Machine hours |
17,000 |
17,000 |
||
[A] |
[B = Difference between A & C] |
[C = Fixed + (Var x Actual units)] |
||
Utilities |
$20,770 |
$2,060 |
U |
$18,710 |
Maintenance |
$57,500 |
$3,600 |
F |
$61,100 |
Supplies |
$5,500 |
$400 |
U |
$5,100 |
Indirect Labor |
$129,600 |
$4,500 |
U |
$125,100 |
Depreciation |
$69,300 |
$1,700 |
U |
$67,600 |
Total Expenses |
$282,670 |
$5,060 |
U |
$277,610 |
Conceptual notes: |
#1: Flexible Budget data is based on 'budgeted rates' applied on 'actual level/output/units' |
#2: Spending Variance = Difference between 'Actual data' and 'Flexible Budget data' |
#3: Activity Variance = Difference between 'Flexible Budget data' and 'Static/Planned Budget data'. |
* Favourable Variance in case of Expenses/Costs occurs when: |
>Actual expenses/costs are LESS than Flexible budget expense/costs [Spending Variance] |
>Flexible budget expenses/costs are LESS than Static/Planned budget expenses/costs [Activity Variance] |
* Unfavourable Variance in case of Expenses/Costs occurs when: |
>Actual expenses/costs are MORE than Flexible budget expense/costs [Spending Variance] |
>Flexible budget expenses/costs are MORE than Static/Planned budget expenses/costs [Activity Variance] |
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door...
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 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 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 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 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 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 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 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 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 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 'ex ble budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and...