Ch 10 h 0 You have just been hired by FAB Corporation, the manufacturer of a rev
ID: 2585772 • Letter: C
Question
Ch 10 h 0 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 ber control of our manufacturing overead coss You find that the company has never used a Sexble budget, and you suggest that preparing such a budget would be an excelent first stap in overhead Ater much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March $20,600 plus $0.10 per S 24,200 plus $1.60 per S 78100 S 8400 S 149 600 S 71.500 $130,000 plus $0.70 per machine-hou During March, the company worked 26,000 machine-hours and produced 15,000 unts. The company had originally planned to work 30,000 machine-hours during March 1. Complete the report showing the activity variances for March. (Indicate the effect of each varlance by selecting " for favorable, "U" for unfavorable, and "None" for no effect (Le, zero variance), Input Activity VariancesExplanation / Answer
1 Computation of Activity Variances for March FAB corporation Activity variances For the Month Ended March 31 Flexible budget Budgeted Machine hours 26000 30000 Variances Uitilities 23200 $20600+(0.10*26000) 23600 $20600+(0.10*30000) 400F maintainance 81600 $40,000+($1.60*26000) 88000 $40,000+($1.60*30000) 6400F Supplies 7800 $0.30*26000 9000 $0.30*30000 1200F indirect labour 148200 $130,000+(0.70*26000) 151000 $130,000+(0.70*30000) 2800F depreciation 70000 70000 NONE Total 330800 341600 10800F 2 Computation of Spending variances FAB corporation Spending variances variances For the Month Ended March 31 Actual Flexible budget Machine hours 26000 26000 Variances Uitilities 24200 23200 $20600+(0.10*26000) 1000U maintainance 78100 81600 $40,000+($1.60*26000) 3500F Supplies 8400 7800 $0.30*26000 600U indirect labour 149600 148200 $130,000+(0.70*26000) 1400U depreciation 71500 70000 1500U Total 331800 330800 1000U