You have just been hired by FAB Corporation, the maker of a revolutionary new garage door opener. The president has asked you to review the company's cost system and "do what you can to help us get better control of our overall manufacturing costs." He finds that the company has never used a flexible budget and suggests that preparing such a budget would be an excellent first step in planning and controlling overhead costs.

After much effort and analysis, you determined the following cost formulas and collected the following actual cost data for March:

	cost formula	Actual cost in March
utilities	$16,700 plus $0.20 per machine-hour	ps	23,300
Maintenance	$38,900 plus $1.30 per machine-hour	ps	63,900
supplies	$0.60 per machine hour	ps	14,200
indirect work	$94,100 plus $1.80 per machine-hour	ps	138,200
Depreciation	$67,900	ps	69,600

During March, the company worked 22,000 machine-hours and produced 16,000 units. The company had originally planned to work 24,000 machine-hours during March.

Required:

1.	Prepare a flexible budget for March. (Indicate the effect of each variation by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (ie, zero variation). Enter all quantities as positive values.)

2.	Prepare a report showing the expense variances for March.

Answer rating: 100% (QA)

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