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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 in March Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,200 + $0.19 per machine-hour $38,100 +$1.70 per machine-hour $0.80 per machine-hour $94,700 +$1.80 per machine-hour $67,800 $ 21,420 $ 62,500 $ 14,200 $ 128,000 $ 69,500 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. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. 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 in March Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,200 + $0.19 per machine-hour $38,100 +$1.70 per machine-hour $0.80 per machine-hour $94,700 +$1.80 per machine-hour $67,800 $ 21,420 $ 62,500 $ 14,200 $ 128,000 $ 69,500 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. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.
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1 Flexible Budget for March Cost Category Budgeted Rate Actual Units Flexible Budget Variable Overhe... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
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