Question

During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March

Chapter 9 Assessment Saved Help 6 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: 2.77 points Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,6ee + $0.11 per machine-hour $38,880 + $1.60 per machine-hour $0.90 per machine-hour $94,18e + $1.70 per machine-hour $67. Bee Actual Cost in March $ 20,380 $ 61,400 $ 16,eee $125,6ee $ 69,500 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March Required: 1. Prepare a flexible budget for March 2. Prepare a report showing the spending variances for March Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a flexible budget for March. (Input all amounts as positive values.) FAB Corporation Flexible Budget For the Month Ended March 31 Machine-hours Utilities Maintenance Mc GE K < Prey 6 of 9 Next >

Answer 1

1	FAB Corporation
	Flexible Budget
	For the Month Ended March 31
	Utilities	18,360	[$16,600 + ($0.11 x 16,000)]
	Maintenance	64,400	[$38,800 + ($1.60 x 16,000)]
	Supplies	14,400	($0.90 x 16,000)
	Indirect labor	121,300	[$94,100 + ($1.70 x 16,000)]
	Depreciation	67,800
	Total	286,260
2	FAB Corporation
	Spending Variances
	For the Month Ended March 31
	Utilities	2,020	unfavorable
	Maintenance	3,000	favorable
	Supplies	1,600	unfavorable
	Indirect labor	4,300	unfavorable
	Depreciation	1,700	unfavorable
	Total	6,620	unfavorable
			(Actual - Flexible)