You have just been hired by FAB Corporation, the manufacturer of a revolutionary

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:

During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work 16,000 machine-hours during March.

Complete the report showing the activity 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.)

2.

Complete the 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.)

please show 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:

Explanation / Answer

FAB Corporation Flexible Budget Performance Report For the Month Ended Mar 31 Units Produced            8,000                            8,000                        8,000 Machin Hrs          14,000                          14,000                      16,000 Actual Results Spending Variances Flexible Budget Activity Variances Planning Budget Expenses: Utilities          21,100         2,200 U                          18,900            400 F                      19,300 16100 + ($0.20 X 14000 Hrs) 16100 + ($0.20 X 16000 Hrs) Maintenance          58,200         3,000 F                          61,200         3,200 F                      64,400 38800 + ($1.60 X 14000 Hrs) 38800 + ($1.60 X 16000 Hrs) Supplies          12,600         1,400 U                          11,200         1,600 F                      12,800 $0.80 X 14000 Frs $0.80 X 16000 Frs Indirect Labor        114,200         3,300 U                       110,900         2,400 F                    113,300 $94100 + ($1.20 X 14000 Hrs) $94100 + ($1.20 X 16000 Hrs) Depreciation          69,700         1,700 U                          68,000                -                        68,000 Total Expenses        275,800         5,600 U                       270,200         7,600 F                    277,800 Answer 1. FAB Corporation Activity Variance For the Month Ended Mar 31 Utilities                400 F Maintenance            3,200 F Supplies            1,600 F Indirect Labor            2,400 F Depreciation                   -                  -   Total Expenses            7,600 F Answer 2. FAB Corporation Spending Variance For the Month Ended Mar 31 Utilities            2,200 U Maintenance            3,000 F Supplies            1,400 U Indirect Labor            3,300 U Depreciation            1,700 U Total Expenses            5,600 U

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