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Following actual cost data for March: Cost Formula Utilities $16,400 + $0.16 per machine-hour Maintenance $38,500 + $1.10 per machine-hour Supplies $0.30 per machine-hour Indirect labor $94,200 + $1.20 per machine-hour Depreciation $67,900 Actual Cost in March $ 21,880 $ 57,600 $ 6,700 $ 122,700 $ 69,600 During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000

Following actual cost data for March: Cost Formula Utilities $16,400 + $0.16 per machine-hour Maintenance $38,500 + $1.10 per machine-hour Supplies $0.30 per machine-hour Indirect labor $94,200 + $1.20 per machine-hour Depreciation $67,900 Actual Cost in March $ 21,880 $ 57,600 $ 6,700 $ 122,700 $ 69,600 During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: Cost Formula Utilities $16,400 + $0.16 per machine-hour Maintenance $38,500+ $1.10 per machine-hour Supplies $0.30 per machine-hour Indirect labor $94,200 + $1.20 per machine-hour Depreciation $67,900 Actual Cost in March $21,880 $ 57,600 $ 6,700 $ 122,700 $ 69,600 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. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March.
Transcribed Image Text: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: Cost Formula Utilities $16,400 + $0.16 per machine-hour Maintenance $38,500+ $1.10 per machine-hour Supplies $0.30 per machine-hour Indirect labor $94,200 + $1.20 per machine-hour Depreciation $67,900 Actual Cost in March $21,880 $ 57,600 $ 6,700 $ 122,700 $ 69,600 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. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March.
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