You have just been hired by SecuriDoor Corporation, the manufacturer of a revolu

Question

You have just been hired by SecuriDoor Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review die company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that die 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 die following actual cost data for April: During April, the company worked 17,000 machine-hours and produced 11,000 units. The company had originally planned to work 19,000 machine-hours during April. Required: Prepare a flexible budget for April. (Input all amounts as positive values.) Prepare a report showing the spending variances for April. (Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required. Indicate the effect of each variance by selecting 'F" for favorable. "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Explanation / Answer

flexible budgets are estimations of sales at different units of production ,materials budget and cash budget all thesa budgets are estimations which are flexibly changed.When ever there is a difference in budgeted values and actual values .the difference is called variance. The budgeted casts and actual costs difference is called Spending variance.

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