You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The presidentasked you to review the company's costing system and "do what you can to help us get better control of our manufacturing overheadcosts." You find the company has never used a flexible budget, and you suggest preparing such a budget would be an excellent firststep 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:UtilitiesMaintenanceSuppliesIndirect laborDepreciationCost Formula$16,800 +$0.17 per machine-hour$38,500 +$1.50 per machine-hour$0.40 per machine-hour$94, 300 +$1.20 per machine-hour$67,800Actual Costin March$ 22,170$ 63,800$ 8,200$ 120,400$ 69,500During March, the company worked 19,000 machine-hours and produced 13,000 units. The company originally planned to work 21,000machine-hours during March.Required:1. Calculate the activity variances for March.2. Calculate the spending variances for March.

**1. Activity Variances:**- Utilities: - Flexible budget cost = $16800 + $0.17 × 21,000 = $17,850…

Answered: You have just been hired by FAB…

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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Tim Johnson is a news reporter and feature writer for The Wall Street Review, an important daily newspaper for financial managers. Tim’s assignment is to develop two feature articles: one on life-cycle costing and one on business analytics, including interviews with chief financial officers and operating managers. Tim has a generous travel budget for research into company history, operations, and market analysis for the firms he selects for the article. Tim has asked you to recommend industries and firms that would be good candidates for the article. What would you advise? Explain your recommendations.
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 $16,000 + $0.12 per machine-hour $ 19,960 Maintenance $38,700 + $2.00 per machine-hour $ 68,500 Supplies $0.80 per machine-hour $ 14,200 Indirect labor $94,500 + $1.90 per machine-hour $ 129,600 Depreciation $67,800 $ 69,500 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000…
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 $16,900 + $0.15 per machine-hour $38,600 + $1.80 per machine-hour $0.30 per machine-hour $94,300 + $1.30 per machine-hour $67,500 Actual Cost in March $ 21,400 $ 64,800 $ 5,200 $ 118,600 $ 69,200 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company originally planned to work 18,000 machine-hours during March. Required: 1.…
Hiram's Lakeside is a popular restaurant located on Lake Washington In Seattle. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student Intern to conduct an activity-based costing study. The Intern, in consultation with the owner, identified three major activities and then completed the first-stage allocations of costs to the activity cost pools. The results appear below. Activity Cost Pool Serving a party of diners Serving a diner Serving drinks Activity Measure Number of parties served Number of diners served Number of drinks ordered Total Cost $ 15,950 $ 112,800 $ 33,480 Total Activity 5,500 parties 12,000 diners 10,800 drinks The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top- management salaries. Some costs, such as the cost of cleaning the linens that cover the restaurant's tables, vary with the number of parties served. Other costs, such…
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As you learned in the previous chapters, Current Designs has two main product lines-composite kayaks, which are handmade and very labor-intensive, and rotomolded kayaks, which require less labor but employ more expensive equipment. Current Designs' controller, Diane Buswell, is now evaluating several different methods of assigning overhead to these products. It is important to ensure that costs are appropriately assigned to the company's products. At the same time, the system that is used must not be so complex that its costs are greater than its benefits. Diane has decided to use the following activities and costs to evaluate the methods of assigning overhead. Activities Designing new models Creating and testing prototypes Creating molds for kayaks Cost $124,000 144,000 182,000 Operating oven for the rotomolded kayaks 41,000 Operating the vacuum line for the composite kayaks 28,000 Supervising production employees 168,000 Curing time (the time that is needed for the chemical processes…
Accounting Areen has just been employed as a Trainee Management Accountant by Sarween & Sons, a newly established manufacturing company in Duhok. Areen is one of the seven members of a committee recently set up by the managing director of Sarween & Sons to advise the company on the benefits of changing its product costing method from Absorption costing to Activity Based Costing. As part of this project, Areen has come to you - the Finance Manager to ask for help with understanding the differences between activity-based costing and strategic activity-based management. Required: Explain how you would be of help to Areen?
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None

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