You have just been hired by FAB Corporation, the manufacturer of a revolutionary
ID: 2563343 • 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:
During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during March.
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:
i Chrome File Edit ie History Bookmarks People Window Help D, Sun 1 1 :38 AM E /Garrison CH9 Quiz C | ezto.mheducation.com/hm.tpx?--0.06756722 1339 141 39-1509899818068 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 Ublities Supplies Indirect labor Total 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.) FAB Corporation Spending Variances For the Month Ended March 31 Ublities Supplies Indirect labor TotalExplanation / Answer
1 Flexible budget Planning budget Activity variances Utilities 19080 19320 240 F Maintenance 64700 67500 2800 F Supplies 15200 16800 1600 F Indirect labor 127100 130500 3400 F Depreciation 68500 68500 0 None Total 294580 302620 8040 F 2 Flexible budget Actual results Spending variances Utilities 19080 21120 2040 U Maintenance 64700 61300 3400 F Supplies 15200 16600 1400 U Indirect labor 127100 131400 4300 U Depreciation 68500 70200 1700 U Total 294580 300620 6040 U
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