1 References Problem 9-18 (Algo) 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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,500 $0.12 per nachine-bour $38,800 $1.40 per machine-hour 50.70 per machine-hour $54,100 $1.70 per machine-hour 147,000 Actual Cost in March $ 21,100 $ 46,200 $ 16,400 Required: 1. Calculate the activity variances for March 2. Calculate the spending variances for March $ 135,000 $ 69,500 During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work 24,000 machine-hours during March
1 References Problem 9-18 (Algo) 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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,500 $0.12 per nachine-bour $38,800 $1.40 per machine-hour 50.70 per machine-hour $54,100 $1.70 per machine-hour 147,000 Actual Cost in March $ 21,100 $ 46,200 $ 16,400 Required: 1. Calculate the activity variances for March 2. Calculate the spending variances for March $ 135,000 $ 69,500 During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work 24,000 machine-hours during March
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 9-18 (Algo) 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:
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Cost Formula
$16,500 $0.12 per nachine-hour
$30,000+ 81.40 per machine-hour
50.70 per machine-hour
$94,100 $1.70 per machine-hour
$67,800
Actual Cost
in March
$ 21,180
$ 66,200
$ 16,600
$ 135,800
$ 69,500
During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work
24,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March
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