You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening...

90.2K

Verified Solution

Question

Accounting

You have just beenhired by FAB Corporation, the manufacturer of a revolutionary newgarage door opening device. The president has asked that you reviewthe company’s costing system and “do what you can to help us getbetter control of our manufacturing overhead costs.” You find thatthe company has never used a flexible budget, and you suggest thatpreparing such a budget would be an excellent first step inoverhead planning and control.
After much effort andanalysis, you determined the following cost formulas and gatheredthe following actual cost data for March:
CostFormula Actual Cost in March
Utilities $16,400 + $0.19per machine-hour $ 22,760
Maintenance $38,200 + $1.80per machine-hour $ 75,200
Supplies $0.60 permachine-hour $ 14,200
Indirectlabor $94,800 + $1.50per machine-hour $ 131,700
Depreciation $68,200 $ 69,900
During March, thecompany worked 22,000 machine-hours and produced 16,000 units. Thecompany had originally planned to work 24,000 machine-hours duringMarch.
2. Calculate thespending variances for March.

Answer & Explanation Solved by verified expert

3.9 Ratings (576 Votes)

See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

You have just beenhired by FAB Corporation, the manufacturer of a revolutionary newgarage door opening device. The president has asked that you reviewthe company’s costing system and “do what you can to help us getbetter control of our manufacturing overhead costs.” You find thatthe company has never used a flexible budget, and you suggest thatpreparing such a budget would be an excellent first step inoverhead planning and control.After much effort andanalysis, you determined the following cost formulas and gatheredthe following actual cost data for March:CostFormulaActual Cost in MarchUtilities$16,400 + $0.19per machine-hour$22,760Maintenance$38,200 + $1.80per machine-hour$75,200Supplies$0.60 permachine-hour$14,200Indirectlabor$94,800 + $1.50per machine-hour$131,700Depreciation$68,200$69,900During March, thecompany worked 22,000 machine-hours and produced 16,000 units. Thecompany had originally planned to work 24,000 machine-hours duringMarch.2. Calculate thespending variances for March.

	CostFormula	Actual Cost in March
Utilities	$16,400 + $0.19per machine-hour	$	22,760
Maintenance	$38,200 + $1.80per machine-hour	$	75,200
Supplies	$0.60 permachine-hour	$	14,200
Indirectlabor	$94,800 + $1.50per machine-hour	$	131,700
Depreciation	$68,200	$	69,900