Problem 9-23 (Algo) Flexible Budgets and Spending Variances [LO9-1, LO9-2] You have just been hired by FAB Corporation, the manufacturer f 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 in March Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,800+ $0.12 per machine-hour $38,600 + $2.00 per machine-hour $0.50 per machine-hour $95,000+ $2.00 per machine-hour $68,100 $ 20,520 $ 64,400 $ 7,800 $ 127,900 $ 69,800 During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work 16,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.

Problem 9-23 (Algo) Flexible Budgets and Spending Variances [LO9-1, LO9-2] You have just been hired by FAB Corporation, the manufacturer f 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 in March Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,800+ $0.12 per machine-hour $38,600 + $2.00 per machine-hour $0.50 per machine-hour $95,000+ $2.00 per machine-hour $68,100 $ 20,520 $ 64,400 $ 7,800 $ 127,900 $ 69,800 During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work 16,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter5: Product And Service Costing: Job-order System

Section: Chapter Questions

Problem 27P: Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming...

See similar textbooks

Related questions

Q: OCF analysis

A: Operating Cashflow Analysis = Net Income + Depreciation and Amortization- Net Working capital

Q: Define terminal value

A: Terminal value is the value of the project or the security at the end of a specified future date.…

Q: Define NRV method.

A: Definition: Product costs: The costs incurred to acquire the merchandise, ship the stock, prepare…

Q: hat is APY

A: In interest there is compounding and other is simple interest. In the compouding there is interest…

Q: nkkkk

A: We can decide upon the better choice of loan by computing the future value of both the loans. Lower…

Q: Whispering plc had income from continuing operations of £ 13,780,000 in 2022. During 2022, it…

A: SOLUTION- NET INCOME IS ALSO CALLED NET EARNINGS , IS SALES MINUS COST OF GOOD SOLD , GENERAL…

Q: Define Volcker rule

A: Volcker Rule is a regulation that implies restrictions on the banks to involve in the stock market…

Q: How to calcualte IRR

A: It stands for the discount rate at which cash flows' net present value (NPV) drops to zero.…

Q: Define TED spread

A: The term TED spread stands for Treasury Euro Dollar Spread. It can be defined as the credit…

Q: Define agent

A: Introduction: An agent is a party that has oral or written authority to perform for another…

Q: Hi can you explain transaction F.

A: Every business wants that all items should be reported accurately in the financial statements. These…

Q: Define Will.

A: A will is a legal document in which a person specifies how his property is going to be distributed…

Q: at is busd What is xrp How they

A: What is busd ? The New York State Department of Financial Services (NYDFS) has authorised Binance…

Q: I, J, K

A: i. Payment of interest would include an outflow of cash and also an increase in interest expense.

Q: Luis Madero, after working for several years with a large public accounting firm, decided to open…

A: The accounting equation is considered as a mathematical representation of the transaction. It…

Q: duct

A: The right Answer is b Long -term nature of most Product-related decisions.

Q: Define cardinality.

A: Cardinality: Cardinality refers to number of possible links of one table with another table.…

Q: Define transaction

A: A transaction is an instance of buying or selling something.

Q: Peri

A: Perpetuity in financial system can be defined as annuity which has no end. Or in other words it is…

Q: Num.10

A: We’ll answer the 10th question since it is specifically asked.

Q: Calculate the ROA, ROE, NOPAT , EVA

A: a. ROATo calculate the ROA we will use the following formula,therefore the ROA will be,b. ROETo…

Q: Maslow hierarchy of need theory

A: Maslow's hierarchy of needs is a motivational theory in psychology comprising a five-tier model of…

Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

Kmu

Problem 9-23 (Algo) Flexible Budgets and Spending Variances [LO9-1, LO9-2]
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 in
March
$ 20,520
$ 64,400
$ 7,800
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Cost Formula
$16,800 + $0.12 per machine-hour
$38,600 + $2.00 per machine-hour
$0.50 per machine-hour
$95,000+ $2.00 per machine-hour
$68,100
$ 127,900
$ 69,800
During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work
16,000 machine-hours during March.
Required:
1. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Flexible Budget.

VIEW

Step 2: Calculation for Flexible budget

VIEW

Step 3: Calculation of spending variance.

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Problem 9-23 (Algo) Flexible Budgets and Spending Variances [LO9-1, LO9-2] 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 $16,200+ $0.14 per machine-hour $38,700+ $1.90 per machine-hour $0.60 per machine-hour During March, the company worked 13,000 machine-hours and produced 7,000 units. The company had originally planned to work 15,000 machine-hours during March. Required: 1. Prepare a flexible…
1 Book 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-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…
lg
Did TTW increase unit sales by cutting prices or by using some other strategy?
Please do not give solution in image format thanku
If so, what do you suggest be done to improve the system? Prepare a flexible budget and recompute the budget variances.
Is Mr. Richardson correct in his conclusion that something is wrong with the company’s performance evaluation process?
These are True/False questions. ____ 6. If the total unit cost of manufacturing Product Y is currently $36 and the total unit cost after modifying the style is estimated to be $48, the differential cost for this situation is $12. ____ 7. A process whereby the effect of fluctuations in level of activity is built into the budgeting system is referred to as flexible budgeting. ____ 8. In an investment center, the manager has the responsibility and the authority to make decisions that affect not only costs and revenues, but also the plant assets invested in the center. ____ 9. The capital expenditures budget summarizes future plans for acquisition of fixed assets. ____ 10. The process by which management plans, evaluates, and controls long-term investment decisions involving fixed assets is called capital investment analysis.
A moving, 12-month budget that is updated monthly is a. not used by manufacturing firms. b. a waste of time and effort. c. a master budget. d. a continuous budget. e. always used by firms that prepare a master budget.
Critiquing a Variance Report; Preparing a Performance Report Several years ago, Westmont Corporation developed a comprehensive budgeting system for planning and control purposes. While departmental supervisors have been happy with the system, the factory manager has expressed considerable dissatisfaction with the information being generated by the system. A report for the company’s Assembly department for the month of march follows: After receiving a copy of this cost report, the supervisor of the assembly department started, “These reports are super. It makes me feel really good to see how well things are going in my department. I can’t understand why those people upstairs complain so much about the reports.” For the last several years, the company’s marketing department has chronically failed to meet the sales goals expressed in the company’s monthly budgets. Required: 1. The company’s president is uneasy about the cost reports and would like you to evaluate their usefulness to the…
i need the answer quickly
Question 2.1 TeleTube Inc. manufacturers TVs. Unfortunately, some of the company's data was misplaced by an IT error. Use the following information to replace the lost data: Analysis Actual Results Flexible Variances Flexible Budget Sales- Volume Variances Static Budget Units Sold 112,500 112,500 103,125 Revenues $42,080 $1,000 F (A) $1,400 U (B) Variable Costs (C) $200 U $15,860 $2,340 F $18,200 Fixed Costs $8,280 $860 F $9,140 $9,140 Operating Income $17,740 (D) $16,080 (E) $15,140 Required What are the respective flexible-budget revenues (A)? What are the static-budget revenues (B)? What are the actual variable costs (C) What is the total flexible-budget variance (D)? What is the total sales-volume variance (E)? What is the total static-budget variance?