r of a revolutionary new garage door opening You have just been hired by FAB Cor
ID: 361104 • Letter: R
Question
r of a revolutionary new garage door opening You have just been hired by FAB Corporation, the 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 excel lent 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 Cost Formula Utilities Supplies 0.80 per machine-hour Depreciation $8,300 in March $16,900 plus $0.20 per machine-hour S 21,900 Maintenance $38,000 plus $2.10 per machine-hour 85,400 S 12,800 Indirect labor $94,500 plus $1.80 per machine-hour 124,200 70,000 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. 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 C Activity Variances For the Month Ended March 31 Utilities Supplies Indirect labor Total 2. Complete the report showing the spending variances for March. (ndicate 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 C Spending Variances For the Month Ended March 31 Utilities Supplies Indirect laborExplanation / Answer
In the month of March the company worked for 14,000 machine hours whereas original plan was to work for 16,000 hours.
The comparison of actual costs with the above scenarios as follows:
Variance Head Formula Actual Estimate Plan E - A P - A P -E Utilities 16900plus.2per machine hour 21900 19700 20100 -2200 U -1800 U 400 F Maintenance 38000plus2.1per machine hour 65400 67400 71600 2000 F 6200 F 4200 F Supplies .8per machine hour 12600 11200 12800 -1400 F 200 U 1600 U Indirect labor 94500plus1.8per machine hour 124200 119700 123300 -4500 U -900 U 3600 F Depreciation 68300 70000 68300 68300 -1700 U -1700 U 0 N Machine hours 14000 14000 16000Related Questions
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