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 8,400 $ 149,600 $ 71,500 Cost Formula Utilities Maintenance Supplies Indirect labor Depreciation $20,600 + $e.1e per machine-hour $40, 000 + $1.60 per machine-hour $0.30 per machine-hour $130,000 + $e.70 per machine-hour $70, 000 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. Requlred: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending varlances 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 $ 24, 200 $ 78,100 8,400 $ 149,600 $ 71,500 Cost Formula Utilities Maintenance Supplies Indirect labor Depreciation $20,600 + $e.1e per machine-hour $40, 000 + $1.60 per machine-hour $0.30 per machine-hour $130,000 + $e.70 per machine-hour $70, 000 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. Requlred: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending varlances for March.

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: Cost Formula Actual Cost in March Utilities $16,800 + $0.16 per machine-hour $ 21,800 Maintenance $38,000 + $1.40 per machine-hour $ 59,800 Supplies $0.40 per machine-hour $ 7,800 Indirect labor $94,700 + $1.80 per machine-hour $ 131,600 Depreciation $67,800 $ 69,500 During March, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000…
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 $16,200 + $0.17 per machine-hour $38,700 +$1.50 per machine-hour $0.70 per machine-hour $94,300 +$1.10 per machine-hour $68,100 Actual Cost in March $ 21,570 $ 64,000 $ 14,500 $ 118,300 $ 69,800 During March, the company worked 19,000 machine-hours and produced 13,000 units. The company originally planned to work 21,000 machine-hours during March. Required: 1. Calculate…
Ecco Ltd is engaged in the manufacture of components for the computer hardware industry. The factory consists of three production departments, A, B and C and a number of service departments. The costing system uses a single production overhead absorption rate expressed as a percentage of direct labour cost. A newly qualified accountant has just joined the company and has expressed a view that departmental overhead absorption rates would result in more accurate job costs. With this in mind, she has produced the following budgeted information for the next year. The budgeted production overheads in each department are after the allocation of service department costs. (a) State with reasons, whether you agree with the view that ‘departmental overhead absorption rates would result in more accurate job costs’ and outline why a company would calculate predetermined annual overhead absorption rates as opposed to rates calculated from actual weekly or monthly activity and expenditure. (b) (i)…
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 $16,800+ $0.12 per machine-hour $38,200+ $1.50 per machine-hour $0.70 per machine-hour $94,900 + $1.60 per machine-hour $67,500 Actual Cost in March $ 21,000 $ 62,000 $ 13,800 $ 127,800 $ 69,200 During March, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during March.…
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 $16,800 +$0.17 per machine-hour $38,500 +$1.50 per machine-hour $0.40 per machine-hour $94, 300 +$1.20 per machine-hour $67,800 Actual Cost in March $ 22,170 $ 63,800 $ 8,200 $ 120,400 $ 69,500 During March, the company worked 19,000 machine-hours and produced 13,000 units. The company originally planned to work 21,000 machine-hours during March. Required: 1. Calculate…
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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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $17,000+ $0.12 per machine-hour $38,300+ $1.70 per machine-hour $0.50 per machine-hour During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 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 Actual Cost in March Utilities $16,800 + $0.21 per machine-hour $ 22,800 Maintenance $38,500 + $1.40 per machine-hour $ 60,300 Supplies $0.50 per machine-hour $ 9,800 Indirect labor $94,300 + $1.70 per machine-hour $ 129,200 Depreciation $68,000 $ 69,700 During March, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during…
Jane’s Cookhouse is a popular restaurant located in a scenic setting. The owner of the restaurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an ABC study. The intern, in consultation with the owner, identified three major activities. The intern then completed the first-stage allocations of costs to the activity cost pools, using data from last month’s operations. The results appear below: Activity Cost Pool Activity Measure Total Cost Total Activity Serving a party of diners Number of parties served $ 16,585 5,350 parties Serving a diner Number of diners served $ 107,010 13,050 diners Serving a drink Number of drinks ordered $ 35,310 10,700 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. A group of diners who ask to sit at the same table are counted as a party. Some costs, such as the…
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