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 Actual Cost in March Utilities $16,500 + $0.19 per machine-hour $ 21,530 Maintenance $38,000 + $1.50 per machine-hour $ 57,300 Supplies $0.60 per machine-hour $ 10,000 Indirect labor $94,600 + $1.90 per machine-hour $ 127,800 Depreciation $67,700 $ 69,400 During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.
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 Actual Cost in March Utilities $16,500 + $0.19 per machine-hour $ 21,530 Maintenance $38,000 + $1.50 per machine-hour $ 57,300 Supplies $0.60 per machine-hour $ 10,000 Indirect labor $94,600 + $1.90 per machine-hour $ 127,800 Depreciation $67,700 $ 69,400 During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.
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 Actual Cost in March Utilities $16,500 + $0.19 per machine-hour $ 21,530 Maintenance $38,000 + $1.50 per machine-hour $ 57,300 Supplies $0.60 per machine-hour $ 10,000 Indirect labor $94,600 + $1.90 per machine-hour $ 127,800 Depreciation $67,700 $ 69,400 During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 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 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
Actual Cost in March
Utilities
$16,500 + $0.19 per machine-hour
$ 21,530
Maintenance
$38,000 + $1.50 per machine-hour
$ 57,300
Supplies
$0.60 per machine-hour
$ 10,000
Indirect labor
$94,600 + $1.90 per machine-hour
$ 127,800
Depreciation
$67,700
$ 69,400
During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March.
Required:
1. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.
Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
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.
