You have just been hired by FAB Corporation, the manufacturer of a revolutionary
ID: 2447663 • Letter: Y
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:
Cost Formula Actual Cost in March
Utilities $17,000 plus $0.11 per machine-hour $20,670
Maintenance $38,900 plus $1.30 per machine-hour $54,800
Supplies $0.40 per machine-hour $6,600
Indirect labor $94,500 plus $1.20 per machine-hour $115,800
Depreciation $68,200 $69,900
During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March.
Prepare a flexible budget for March. (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.)
Prepare a report showing the spending variances for March. (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.)
*Could you please show me your work?
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 $17,000 plus $0.11 per machine-hour $20,670
Maintenance $38,900 plus $1.30 per machine-hour $54,800
Supplies $0.40 per machine-hour $6,600
Indirect labor $94,500 plus $1.20 per machine-hour $115,800
Depreciation $68,200 $69,900
During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March.
Required: 1.Prepare a flexible budget for March. (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.)
2.Prepare a report showing the spending variances for March. (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.)
*Could you please show me your work?
Explanation / Answer
You have just been hired by FAB Corporation, the manufacturer of a revolutionary
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