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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 Utilities. Maintenance Supplies Indirect labor Depreciation Cost Formula $16,400 + $0.18 per machine-hour $38,800 +$1.50 per machine-hour $0.80 per machine-hour $94,600 + $1.90 per machine-hour $67,700 $ 21,260 $ 58,100 $ 13,400 $ 127,800 $ 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: Actual Cost in March Utilities. Maintenance Supplies Indirect labor Depreciation Cost Formula $16,400 + $0.18 per machine-hour $38,800 +$1.50 per machine-hour $0.80 per machine-hour $94,600 + $1.90 per machine-hour $67,700 $ 21,260 $ 58,100 $ 13,400 $ 127,800 $ 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Utilities. Maintenance Supplies Indirect labor Depreciation Cost Formula $16,400 + $0.18 per machine-hour $38,800 +$1.50 per machine-hour $0.80 per machine-hour $94,600 + $1.90 per machine-hour $67,700 $ 21,260 $ 58,100 $ 13,400 $ 127,800 $ 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.
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 Utilities. Maintenance Supplies Indirect labor Depreciation Cost Formula $16,400 + $0.18 per machine-hour $38,800 +$1.50 per machine-hour $0.80 per machine-hour $94,600 + $1.90 per machine-hour $67,700 $ 21,260 $ 58,100 $ 13,400 $ 127,800 $ 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.
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