You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president asked you to review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you estimated the following cost formulas and gathered the following actual cost data for March: Cost Formula Actual Cost in March Utilities $16,700 + $0.17 per machine-hour $ 21,900 Maintenance $38,400 + $1.70 per machine-hour $ 66,200 Supplies $0.50 per machine-hour $ 9,800 Indirect labor $94,400 + $1.80 per machine - hour $131,300 Depreciation $68,000 $ 69, 700 During March, the company worked 18,000 machine-hours and produced 12,000 units. The company originally planned to work 20,000 machine - hours during March. Required: Calculate the activity variances for March. Calculate the spending variances for March. During March, the company worked 18,000 machine-hours and produced 12,000 units. The company originally planned to work 20,000 machine - hours during March. Required: Calculate the activity variances for March. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below. Calculate the activity variances for March. Note: 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.
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president asked you to review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you estimated the following cost formulas and gathered the following actual cost data for March: Cost Formula Actual Cost in March Utilities $16,700 + $0.17 per machine-hour $ 21,900 Maintenance $38,400 + $1.70 per machine-hour $ 66,200 Supplies $0.50 per machine-hour $ 9,800 Indirect labor $94,400 + $1.80 per machine - hour $131,300 Depreciation $68,000 $ 69, 700 During March, the company worked 18,000 machine-hours and produced 12,000 units. The company originally planned to work 20,000 machine - hours during March. Required: Calculate the activity variances for March. Calculate the spending variances for March. During March, the company worked 18,000 machine-hours and produced 12,000 units. The company originally planned to work 20,000 machine - hours during March. Required: Calculate the activity variances for March. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below. Calculate the activity variances for March. Note: 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.
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
Transcribed Image Text:You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The
president asked you to review the company's costing system and "do what you can to help us get better control of our
manufacturing overhead costs." You find the company has never used a flexible budget, and you suggest preparing such
a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you
estimated the following cost formulas and gathered the following actual cost data for March: Cost Formula Actual Cost in
March Utilities $16,700 + $0.17 per machine-hour $ 21,900 Maintenance $38, 400 +$1.70 per machine-hour $
66,200 Supplies $0.50 per machine-hour $ 9,800 Indirect labor $94,400 +$1.80 per machine-hour $131,300
Depreciation $68,000 $ 69, 700 During March, the company worked 18,000 machine-hours and produced 12,000 units.
The company originally planned to work 20,000 machine-hours during March. Required: Calculate the activity variances
for March. Calculate the spending variances for March. During March, the company worked 18,000 machine-hours and
produced 12,000 units. The company originally planned to work 20,000 machine-hours during March. Required:
Calculate the activity variances for March. Calculate the spending variances for March. Complete this question by
entering your answers in the tabs below. Calculate the activity variances for March. Note: 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.
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!
Trending now
This is a popular solution!
Step by step
Solved in 4 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