Question

You have just been hed 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 Alter much effort and analysis. you determined the following cost formulas and gathered the following actual cost data for March Cost Formula S p er chine how $ 56,200 $94.60 S $1.5 per machine-hour S1315 Depreciation During March the company worked 18.000 machine hours and produced 12,000 units. The company had originally planned to work 20,000 machine hours during March Required 1 Calculate the activity variances for March 2. Calculate the spending variances for March Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the activity variances for March (Indicate the effect of each variance by selecting for favorable, "u" for navorable, and one fornect e er vananthput all amounts as positive values.) FAB Corporation Activity Variances For the Month Ended March 31

Answer 1

1
	Planning budget	Flexible budget	Activity variances
Utilities	21000	20600	400	F
Maintenance	72400	69000	3400	F
Supplies	8000	7200	800	F
Indirect labor	130600	127000	3600	F
Depreciation	68200	68200	0	None
Total	300200	292000	8200	F
2
	Actual cost	Flexible budget	Spending variances
Utilities	22800	20600	2200	U
Maintenance	66200	69000	2800	F
Supplies	7800	7200	600	U
Indirect labor	131500	127000	4500	U
Depreciation	69900	68200	1700	U
Total	298200	292000	6200	U