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: Actual Cost in March $ 20,600 $ 60,600 $ 11,800 $ 119,600 $ 69,700 Cost Formula Utilities Maintenance Supplies Indirect labor Depreciation $16,400 plus $0.16 per machine-hour S38,300 plus $1.90 per machine-hour S0.80 per machine-hour $94,700 plus $1.60 per machine-hour $68,000 During March, the company worked 13,000 machine-hours and produced 7,000 units. The company had originally planned to work 15,000 machine-hours during March. Required 1. 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.) FAB Corporation Activity Variances For the Month Ended March 31 Utilities Maintenance Supplies Indirect labor Depreciation Total one

Explanation / Answer

Activity Variances Cost Driver Planning Budget (A) Flexible Budget (B) Activity Variance (A-B) Impact Machine Hours            15,000            13,000 Utilities [$16,400 + (Machine hours*$0.16)] $18,800 $18,480 $320 Favourable Maintenance [$38,300 + (Machine hours*$1.90)] $66,800 $63,000 $3,800 Favourable Supplies ($0.80*Machine hours) $12,000 $10,400 $1,600 Favourable Indirect labor [($94,700)+(Machine hours*$1.60)] $118,700 $115,500 $3,200 Favourable Depreciation $68,000 $68,000 $0 None Spending Variances Cost Driver Flexible Budget (A) Actual Results (B) Activity Variance (A-B) Impact Machine Hours            13,000            13,000 Utilities [$16,400 + (Machine hours*$0.16)] $18,480 $20,600 -$2,120 Unfavourable Maintenance [$38,300 + (Machine hours*$1.90)] $63,000 $60,600 $2,400 Favourable Supplies ($0.80*Machine hours) $10,400 $11,800 -$1,400 Unfavourable Indirect labor [($94,700)+(Machine hours*$1.60)] $115,500 $119,600 -$4,100 Unfavourable Depreciation $68,000 $69,700 -$1,700 Unfavourable

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.