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 $ 22,400 $ 61,200 $ 11,800 $ 133,600 $ 70,200 Utilities Maintenance Supplies Indirect labor Depreciation 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. Cost Formula $17,000+ $0.15 per machine-hour $38,600 + $1.20 per machine-hour $0.50 per machine-hour $94,300 + $1.60 per machine-hour $68,500 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 Supplies Indirect labor Depreciation Total
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 $ 22,400 $ 61,200 $ 11,800 $ 133,600 $ 70,200 Utilities Maintenance Supplies Indirect labor Depreciation 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. Cost Formula $17,000+ $0.15 per machine-hour $38,600 + $1.20 per machine-hour $0.50 per machine-hour $94,300 + $1.60 per machine-hour $68,500 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 Supplies Indirect labor Depreciation Total
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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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:
Actual Cost in
March
$ 22,400
$ 61,200
$ 11,800
$ 133,600
$ 70,200
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
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.
Cost Formula
$17,000+ $0.15 per machine-hour
$38,600+ $1.20 per machine-hour
$0.50 per machine-hour
Required:
1. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.
Required 1
$94,300+ $1.60 per machine-hour
$68,500
Complete this question by entering your answers in the tabs below.
Machine-hours
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Total
Prepare a flexible budget for March. (Input all amounts as positive values.)
FAB Corporation
Flexible Budget
For the Month Ended March 31
Required 2
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