P13-19 Flexible budget and overhead performance report ( Time allowed: 35 minutes You have just been hired by FAB Company, the manufacturer of a revolutionary new garage door opening device. John Foster, the managing director, 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 are able to determine the following cost formulas for the company's normal operating range of 20,000 to 30,000 machine-hours each month: To show the managing director how the flexible budget concept works, you have gathered the following actual cost data for the most recent month, March, in which the company worked 26,000 machine-hours and produced 15,000 units: Chapter 13: Flexible budgets and performance reporting The only variance in the fixed costs for the month was with depreciation, which was increased as a result of a purchase of new equipment. The company had originally planned to work 30,000 machine-hours during March. Required 1. Prepare a flexible budget for the company in increments of 5,000 hours. 2. Prepare an overhead performance report for the company for March. (Use the format illustrated in Exhibit 13.11.) 3. What additional information would you need to compute an overhead efficiency variance for the company? P13-19 Flexible budget and overhead performance report ( Time allowed: 35 minutes You have just been hired by FAB Company, the manufacturer of a revolutionary new garage door opening device. John Foster, the managing director, 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 are able to determine the following cost formulas for the company's normal operating range of 20,000 to 30,000 machine-hours each month: To show the managing director how the flexible budget concept works, you have gathered the following actual cost data for the most recent month, March, in which the company worked 26,000 machine-hours and produced 15,000 units: Chapter 13: Flexible budgets and performance reporting The only variance in the fixed costs for the month was with depreciation, which was increased as a result of a purchase of new equipment. The company had originally planned to work 30,000 machine-hours during March. Required 1. Prepare a flexible budget for the company in increments of 5,000 hours. 2. Prepare an overhead performance report for the company for March. (Use the format illustrated in Exhibit 13.11.) 3. What additional information would you need to compute an overhead efficiency variance for the company