You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening
Question:
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president asked that you review the company's costing system to help get better control of the 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:
_____ | Cost Formula | Actual Cost in March |
---|---|---|
Utilities | $16,300 plus $0.16 per machine-hour | $ 21,780 |
Maintenance | $38,300 plus $1.20 per machine-hour | $59,700 |
Supplies | $0.70 per machine-hour | $15,900 |
Indirect labor | $94,400 plus $1.70 per machine-hour | $134,400 |
Depreciation | $67,700 | $69,400 |
During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 machine-hours during March.
Required:
1. Complete the report showing the activity variances for March. Indicate the effect of each variance by selecting ''F'' for favorable, ''U'' for unfavorable, and ''None'' for the no effect (i.e., zero variance). Input all amounts as positive values.
FAB Corporation | ||
---|---|---|
Activity Variances | ||
For the Month Ended March 31 | ||
Utilities | ||
Maintenance | ||
Supplies | ||
Indirect Labor | ||
Depreciation | ||
TOTAL |
2. Complete the report showing the spending variances for March. Indicate the effect of each variance by selecting ''F'' for favorable, ''U'' for unfavorable, and ''None'' for the no effect (i.e., zero variance). Input all amounts as positive values.
FAB Corporation | ||
---|---|---|
Spending Variances | ||
For the Month Ended March 31 | ||
Utilities | ||
Maintenance | ||
Supplies | ||
Indirect Labor | ||
Depreciation | ||
TOTAL |
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer