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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 + $0.13 per machine-hour $38,600 +$1.40 per machine-hour $0.50 per machine-hour $94,800+ $2.00 per machine-hour $68,300 Actual Cost in March $ 20,970 $ 59,000 $ 9,300 $ 133,700 $ 70,000 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 the activity variances for March. 2. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2

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 + $0.13 per machine-hour $38,600 +$1.40 per machine-hour $0.50 per machine-hour $94,800+ $2.00 per machine-hour $68,300 Actual Cost in March $ 20,970 $ 59,000 $ 9,300 $ 133,700 $ 70,000 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 the activity variances for March. 2. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2

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 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 + $0.13 per machine-hour $38,600 +$1.40 per machine-hour $0.50 per machine-hour $94,800+ $2.00 per machine-hour $68,300 Actual Cost in March $ 20,970 $ 59,000 $ 9,300 $ 133,700 $ 70,000 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 the activity variances for March. 2. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. Utilities FAB Corporation Activity Variances For the Month Ended March 31 Maintenance Supplies Indirect labor Depreciation Total
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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,700 + $0.13 per machine-hour $38,600 +$1.40 per machine-hour $0.50 per machine-hour $94,800+ $2.00 per machine-hour $68,300 Actual Cost in March $ 20,970 $ 59,000 $ 9,300 $ 133,700 $ 70,000 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 the activity variances for March. 2. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 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. Utilities FAB Corporation Activity Variances For the Month Ended March 31 Maintenance Supplies Indirect labor Depreciation Total
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