FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text: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
$17,000+ $0.12 per machine-hour
$38,300+ $1.70 per machine-hour
$0.50 per machine-hour
During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work
18,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
$94,700+ $1.50 per machine-hour
$67,600
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Utilities
Calculate the activity variances for March.
Note: 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.
Maintenance
Supplies
Indirect labor
Depreciation
Total
Actual Cost
in March
$ 20,960
$ 62,700
$ 8,800
$ 122,600
$ 69,300
FAB Corporation
Activity Variances
For the Month Ended March 31
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