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. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost irn March $ 21,560 Cost Formula $17,000 plus $0.12 per machine-hour Utilities Maintenance Supplies Indirect labor $94,800 plus $1.70 per machine-hour Depreciation $67,500 $38,500 plus $1.20 per machine-hour59,900 $0.40 per machine-hour $ 9,000 $134,800 69,200 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. nces 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 report showing 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.) 23,000 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 report showing the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unf avorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) FAB Corporation Spending Variances For the Month Ended March 31 Utilities Maintenance Supplies Indirect labor Depreciation Total Required 1 23,000 ehours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. ed Complete this question by entering your answers in the tabs below. Required 1Required2 ook Prepare a flexible budget fof March. (Input all amounts as positive values.) Print FAB Corporation Flexible Budget For the Month Ended March 31 ferences Machine-hours Utilities Maintenance Supplies Indirect labor Total Required2 > C Prev

Answer 1

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23000 machine hours AS PER BUDGET 21000 machine hours planned 1 utilities 2 maintenance 3 supplies 4 indirect labour 5 depriciation 17000 plus 0.12 per machine hour 38500 plus 1.20 per machine hour 19760 66100 9200 133900 67500 21,560 59,900 0 0.40 per machine hour 9,000 134,800 69,200 FAB CORPORATION 94800 plus 1.70 per machine hour 67500 FAB CORPORATION FLIXIBLE BUDGET THE MONTH OF ENDED MA SPENDING VARIANCES MO OF ENDED BUDGETED ACTUALS MACHINE HOURS utilities maintenance 23,000 19,760 17000+0.12 23000 66,100 38500+1.20 23000 MACHINE HOURS 21000 utilities maintenance supplies indirect labour depriciation OTAL VARIENCES 3,518u 18,012 60,352 8,400 122,257 67,500 276,550 21,560 59,900 9,000 134,800 69,200 294,460 452 9,200 0.40 23000 133,900 948001.T0 23000 67,500 319,460 600 12,543U indirect labour depriciation TOTAL 1,700 17,910 s Scanned with CamScanner