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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 Cost Formula $ 19,940 Utilities Maintenance Supplies $16,100+ $0.12 per machine-hour $38,600+ $2.10 per machine-hour $0.80 per machine-hour $ 68,100 Indirect labor Depreciation $94,700+ $1.40 per machine-hour $68,300 $ 13,400 $119,400 $ 70,000 During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 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 Cost Formula $ 19,940 Utilities Maintenance Supplies $16,100+ $0.12 per machine-hour $38,600+ $2.10 per machine-hour $0.80 per machine-hour $ 68,100 Indirect labor Depreciation $94,700+ $1.40 per machine-hour $68,300 $ 13,400 $119,400 $ 70,000 During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 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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Requirement 1 FAB CORPORATION FLEXIBLE BUDGET For the Month Ended March 31 Utilitie... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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