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Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
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![Problem 9-23 (Algo) Flexible Budgets and Spending Variances [LO9-1, LO9-2]
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:
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Cost Formula
$16,200+ $0.14 per machine-hour
$38,700+ $1.90 per machine-hour
$0.60 per machine-hour
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. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.
Required 1
594,700+ $1.30 per machine-hour
$68,400
Complete this question by entering your answers in the tabs below.
Machine-hours
Utilities
Maintenance
Supplies
Indirect labor
Actual Cost in
March
$ 20,100
$ 61,000
$ 8,800
$ 115,100
$ 70,100
Required 2
Prepare a flexible budget for March. (Input all amounts as positive values.)
FAB Corporation
Flexible Budget
For the Month Ended March 31](https://content.bartleby.com/qna-images/question/be10320e-4a25-401f-8cbc-fb37205367de/b905dec2-6136-44df-8a25-de6196c5f377/m4qvkh9_thumbnail.jpeg)
Transcribed Image Text:Problem 9-23 (Algo) Flexible Budgets and Spending Variances [LO9-1, LO9-2]
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:
Utilities
Maintenance
Supplies
Indirect labor
Depreciation
Cost Formula
$16,200+ $0.14 per machine-hour
$38,700+ $1.90 per machine-hour
$0.60 per machine-hour
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. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.
Required 1
594,700+ $1.30 per machine-hour
$68,400
Complete this question by entering your answers in the tabs below.
Machine-hours
Utilities
Maintenance
Supplies
Indirect labor
Actual Cost in
March
$ 20,100
$ 61,000
$ 8,800
$ 115,100
$ 70,100
Required 2
Prepare a flexible budget for March. (Input all amounts as positive values.)
FAB Corporation
Flexible Budget
For the Month Ended March 31
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- 1 Book References Problem 9-18 (Algo) 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 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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,500 $0.12 per nachine-hour $30,000+ 81.40 per machine-hour 50.70 per machine-hour $94,100 $1.70 per machine-hour $67,800 Actual Cost in March $ 21,180 $ 66,200 $ 16,600 $ 135,800 $ 69,500 During March, the company worked 22,000 machine-hours and produced…arrow_forwardKmuarrow_forwardlgarrow_forward
- If so, what do you suggest be done to improve the system? Prepare a flexible budget and recompute the budget variances.arrow_forwardIs Mr. Richardson correct in his conclusion that something is wrong with the company’s performance evaluation process?arrow_forwardDo not give answer in imagearrow_forward
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