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 Utilities $16,200 + $0.21 per machine-hour Maintenance $38,900 + $1.20 per machine-hour Supplies $0.80 per machine-hour Indirect labor $94,300 + $1.30 per machine-hour Depreciation $67,500 Actual Cost in March $ 21,990 $ 55,500 $ 15,000 $ 119,900 $ 69,200 During March, the company worked 17,000 machine-hours and produced 11,000 units. The company had originally planned to work 19,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate 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 Utilities $16,200 + $0.21 per machine-hour Maintenance $38,900 + $1.20 per machine-hour Supplies $0.80 per machine-hour Indirect labor $94,300 + $1.30 per machine-hour Depreciation $67,500 Actual Cost in March $ 21,990 $ 55,500 $ 15,000 $ 119,900 $ 69,200 During March, the company worked 17,000 machine-hours and produced 11,000 units. The company had originally planned to work 19,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March.

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Description: You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garagedoor opening device. The president has asked that you review the company's costing systemand "do what you can to help us get better control of our manufacturi

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 $ 22,080 $ 78,500 $ 15,200 $ 133,000 $ 69,600 Cost Formula $16,100 + $0.19 per machine-hour $38,500 + $2.10 per machine-hour $0.70 per machine-hour $94,700 + $1.70 per machine-hour $67,900 Utilities Maintenance Supplies Indirect labor Depreciation During March, the company worked 20,000 machine-hours and produced 14,000 units. The company had originally planned to work 22,000 machine-hours during March.…
After reviewing the new activity-based costing system that Nancy Chen has implemented at IVC's CenterPoint manufacturing facility, Tom Spencer, the production supervisor, believes that he can reduce production costs by reducing the time spent on machine setups. He has spent the last month working with employees in the plant to change over the machines more quickly with the same reliability. He plans to produce 118,000 units of the Sport model and 49,000 units of the Pro model in the first quarter. He believes that with his more efficient setup routine, he can reduce the number of setup hours for both the Sport and the Pro products by one-third. Cost Drivers and Cost Driver Volumes-CenterPoint Manufacturing Facility Activity Assembly building Assembling Setting up machines Handling material Direct material Direct labor Assembly Packaging Total direct labor Cost Driver Machine-hours Setup hours Production runs Packaging building Direct labor-hours Inspecting and packing Shipping Number…
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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 $ 22,570 $ 76,400 $ 20,500 $ 125,600 $ 69,700 Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,400 + $0.19 per machine-hour $38,900+ $1.90 per machine-hour $0.90 per machine-hour $94,800+ $1.30 per machine-hour $68,000 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.…
I need help with number 10 and 11.
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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,700 + $0.20 per machine-hour $38,100 + $1.30 per machine-hour $0.30 per machine-hour $94,500+ $1.60 per machine-hour $68,300 Actual Cost in March $ 23,500 $ 64,400 $ 7,300 $ 135,400 $ 70,000 During March, the company worked 23,000 machine-hours and produced 17,000 units. The company originally planned to work 25,000 machine-hours during March. Required: 1. Calculate…
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 Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,400 + $0.19 per machine-hour $38,100 +$1.60 per machine-hour $0.60 per machine-hour $94,400 +$1.60 per machine-hour $67,600 Actual Cost in March $ 21,810 $ 62,300 $ 11,200 $ 125,700 $ 69,300 During March, the company worked 17,000 machine-hours and produced 11,000 units. The company originally planned to work 19,000 machine-hours during March. Required: 1. Calculate…
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 $ 21,010 $ 54,900 $ 16,600 $135,000 $ 69,700 Utilities Maintenance Supplies Indirect labor Depreciation During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March. Cost Formula $16,900 + $0.11 per…
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 $ 22,180 $ 75,300 $ 16,600 $ 131,000 $ 69,200 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 $16,300 + $0.17 per machine-hour $38,300+ $1.80 per machine-hour $0.70 per machine-hour Required: 1. Prepare a flexible budget…
As CEO of Riverside Marine, Rachel Moore knows it is important to control costs and to respond quickly to changes in the highly competitive boat-building industry. When Gerbig Consulting proposes that Riverside Marine invest in an ERP system, she forms a team to evaluate the proposal: the plant engineer, the plant foreman, the systems specialist, the human resources director, the marketing director, and the management accountant. A month later, the management accountant Miles Cobalt reports that the team and Gerbig estimate that if Riverside Marine implements the ERP system, it will incur the following costs: Costs of the Project a.$390,000 in software costs b. $85,000 to customize the ERP software and load Riverside Marine'sdata into the new ERP system c. $112,000 for employee training Benefits of the Project a. More efficient order processing should lead to savings of $185,000. b. Streamlining the manufacturing process so that it maps into the ERP…
Goulburn, Incorporated produces parts for heavy equipment used in mining and construction. The plant that produces one part common to many vehicles is highly automated, so all labor is considered part of factory overhead. The plant manager, who has just been promoted, would like to understand how overhead costs fluctuate in order to improve planning and budgets. After discussions with both financial and operations members of the plant staff, there is general agreement that the best cost driver for overhead is machine-hours. Monthly data were collected from the most recent two years on machine-hours and overhead. More months of data were available, but a process change had taken place about 30 months earlier, so the staff believed any data from before that time would be misleading. The data are shown in the following table: Month Machine-Hours Factory Overhead 1 39,300 $ 527,100 2 37,300 416,500 3 30,100 365,800 4 42,400 498,200 5 50,600 590,700 6 45,500 503,400 7…
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 $ 24,200 $ 78,100 Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $20,600 + $0.10 per machine-hour $40,000 +$1.60 per machine-hour $0.30 per machine-hour $130,000 + $0.70 per machine-hour $70,000 $ 8,400 $ 149,600 $ 71,500 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March.…