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 Cost Formula $16,500 plus $0.18 per machine-hour $38,400 plus $1.40 per machine-hour $0.30 per machine-hour $94,000 plus $1.30 per machine-hour Depreciation $67,800 Utilities 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. FAB Corporation Flexible Budget For the Month Ended March 31 Required: 1. Prepare a flexible budget 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.) Actual Cost in March $ 22,440 $ 64,400 $ 6,700 Maintenance Supplies Indirect labor Depreciation Total $124,800 $ 69,500 19,470
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 Cost Formula $16,500 plus $0.18 per machine-hour $38,400 plus $1.40 per machine-hour $0.30 per machine-hour $94,000 plus $1.30 per machine-hour Depreciation $67,800 Utilities 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. FAB Corporation Flexible Budget For the Month Ended March 31 Required: 1. Prepare a flexible budget 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.) Actual Cost in March $ 22,440 $ 64,400 $ 6,700 Maintenance Supplies Indirect labor Depreciation Total $124,800 $ 69,500 19,470
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Topic Video
Question
Please do not give solution in image format thanku
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:
Utilities
Maintenance
Supplies
Indirect labor
Cost Formula
$16,500 plus $0.18 per machine-hour
$38,400 plus $1.40 per machine-hour
$0.30 per machine-hour
Depreciation $67,800
$94,000 plus $1.30 per machine-hour
Utilities
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.
Total
Required:
1. Prepare a flexible budget 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.)
FAB Corporation
Flexible Budget
For the Month Ended March 31
Maintenance
Supplies
Indirect labor
Depreciation
Actual Cost
in March
$ 22,440
$ 64,400
$ 6,700
$124,800
$ 69,500
19,470
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education