Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, Lo9-3 You have just

Question

Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, Lo9-3 You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that 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. you review the company's costing system and "do what you can to help us get better control of our manufacturing Book After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March Print Cost in March 23,120 63,090 15, 286 $128, 20e Cost Fornula Utilities Maintenance Supplies Indirect labor Depreciation 16,700 plus 50.21 per machine-hour 38,409 plus $1.40 per machine-hour 58.78 per machine-hour $94,300 plus $1.se per machine-hour $68, 200 69,900 During March, the company worked 20,000 machine-hours and produced 14,000 units. The company had originally planned to work 22,000 machine-hours during March. Required 1. Calculate the activity variances for March 2. Calculate the spending variances for March.

Explanation / Answer

1) Activity variance :

2) SPending variance :

Activity variance Utilities 420 F Maintenance 2800 F Supplies 1400 F Indirect labour 3000 F Depreciation None Total 7620 F

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