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 Depreciation Cost Formula $16,200 + $0.21 per machine-hour $38,900 + $1.70 per machine-hour $0.50 per machine-hour $94,400 +$1.80 per machine-hour $68,100 Actual Cost in March $ 21,360 $ 59,900 $ 7,800 $ 124,100 $ 69,800 During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work 16,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a report showing the spending variances for March. (Indicate the effect of each va favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amc FAB Corporation Spending Variances For the Month Ended March 31 Utilities ป Maintenance F Supplies U Indirect labor
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 Depreciation Cost Formula $16,200 + $0.21 per machine-hour $38,900 + $1.70 per machine-hour $0.50 per machine-hour $94,400 +$1.80 per machine-hour $68,100 Actual Cost in March $ 21,360 $ 59,900 $ 7,800 $ 124,100 $ 69,800 During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work 16,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a report showing the spending variances for March. (Indicate the effect of each va favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amc FAB Corporation Spending Variances For the Month Ended March 31 Utilities ป Maintenance F Supplies U Indirect labor
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Depreciation
Cost Formula
$16,200 + $0.21 per machine-hour
$38,900 + $1.70 per machine-hour
$0.50 per machine-hour
$94,400 +$1.80 per machine-hour
$68,100
Actual Cost in
March
$ 21,360
$ 59,900
$ 7,800
$ 124,100
$ 69,800
During March, the company worked 14,000 machine-hours and produced 8,000
units. The company had originally planned to work 16,000 machine-hours during
March.
Required:
1. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a report showing the spending variances for March. (Indicate the effect of each va
favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amc
FAB Corporation
Spending Variances
For the Month Ended March 31
Utilities
ป
Maintenance
F
Supplies
U
Indirect labor
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