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 + $0.13 per machine-hour $39,000+ $1.80 per machine-hour $0.50 per machine-hour $94,600+ $1.50 per machine-hour $68, 100 Actual Cost in March. $ 20,340 $ 65,200 $8,800 $ 122,500 $ 69,800 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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,200 + $0.13 per machine-hour $39,000+ $1.80 per machine-hour $0.50 per machine-hour $94,600+ $1.50 per machine-hour $68, 100 Actual Cost in March. $ 20,340 $ 65,200 $8,800 $ 122,500 $ 69,800 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Topic Video
Question
![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 + $0.13 per machine-hour
$39,000+ $1.80 per machine-hour
$0.50 per machine-hour
$94,600+ $1.50 per machine-hour
$68,100
Actual Cost
in March
$ 20,340
$ 65,200
$ 8,800
$ 122,500
$ 69,800
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe50cecdb-0695-4d5e-9af0-412b259d27be%2Fd1a34939-5f02-4acc-b698-dc4a9df763af%2Fheyd71_processed.png&w=3840&q=75)
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 + $0.13 per machine-hour
$39,000+ $1.80 per machine-hour
$0.50 per machine-hour
$94,600+ $1.50 per machine-hour
$68,100
Actual Cost
in March
$ 20,340
$ 65,200
$ 8,800
$ 122,500
$ 69,800
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.
![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
Maintenance
Supplies
Indirect labor
Depreciation
Total
FAB Corporation
Activity Variances
For the Month Ended March 31
Show Transcribed Text
Required 1 Required 2
FAB Corporation
Spending Variances
For the Month Ended March 31
< Required 1
Calculate the spending 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
Maintenance
Supplies
Indirect labor
Depreciation
Total
Required 2 >
< Required 1
Required 2 >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe50cecdb-0695-4d5e-9af0-412b259d27be%2Fd1a34939-5f02-4acc-b698-dc4a9df763af%2Ft1kk72n_processed.png&w=3840&q=75)
Transcribed Image Text: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
Maintenance
Supplies
Indirect labor
Depreciation
Total
FAB Corporation
Activity Variances
For the Month Ended March 31
Show Transcribed Text
Required 1 Required 2
FAB Corporation
Spending Variances
For the Month Ended March 31
< Required 1
Calculate the spending 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
Maintenance
Supplies
Indirect labor
Depreciation
Total
Required 2 >
< Required 1
Required 2 >
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education