Chapter 8 HVw 10.00 points You have just been hired by FAB Corporation, the manu
ID: 2556793 • Letter: C
Question
Chapter 8 HVw 10.00 points 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: Actual Cost Cost Formula in March $16,700 plus $0.16 per machine-hour 21,060 Maintenance $38,000 plus $1.50 per machine-hour S 55,800 S 11,000 Indirect labor $94,400 plus $1.60 per machine-hour $120,900 S 69,300 Utilities Supplies$0.70 per machine-hour Depreciation $67,600 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. Propare a lexible budget 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 Flexible Budget For the Month Ended March 31 Utiaties Maintenance Supplies Indirect labor Depreciation Total O Type here to searchExplanation / Answer
Answer 1. FAB Corporation Activity Variances For the Month Ended Mar 31 Planning Budget Flexible Budget Activity Variance Machine Hours - (q) 16,000.00 14,000.00 Utilities - $16,700 + 0.16 q 19,260.00 18,940.00 320.00 (F) Maintenace - $38,000 + $1.50 q 62,000.00 59,000.00 3,000.00 (F) Supplies - $0.70 q 11,200.00 9,800.00 1,400.00 (F) Indirect Labor - $94,400 + $1.60 q 120,000.00 116,800.00 3,200.00 (F) Depreciation 67,600.00 67,600.00 - (F) Total 280,060.00 272,140.00 7,920.00 (F) Answer 2. FAB Corporation Spending Variances For the Month Ended Mar 31 Flexible Budget Actual Spending Variance Machine Hours - (q) 14,000.00 14,000.00 Utilities - $16,700 + 0.16 q 18,940.00 21,060.00 2,120.00 (U) Maintenace - $38,000 + $1.50 q 59,000.00 55,800.00 3,200.00 (F) Supplies - $0.70 q 9,800.00 11,000.00 1,200.00 (U) Indirect Labor - $94,400 + $1.60 q 116,800.00 120,900.00 4,100.00 (U) Depreciation 67,600.00 69,300.00 1,700.00 (U) Total 272,140.00 278,060.00 5,920.00 (U)