The controller at FT Industries has asked you, her new assistant, to analyze the following data related to projected and actual overhead costs for October:

For October, the number of good units produced was used to compute the 2,100 standard machine hours allowed.

1. Prepare a monthly flexible budget for operating activity at 2,000 machine hours, 2,200 machine hours, and 2,500 machine hours.

2. Develop a flexible budget formula.

3. The company’s normal operating capacity is 2,200 machine hours per month. Compute the fixed overhead rate at this level of activity. Then break the rate down into rates for each element of fixed overhead.

4. Prepare a detailed comparative cost analysis for October. Include all variable and fixed overhead costs. Format your analysis by using columns for the following five elements: cost category, cost per machine hour, costs applied, actual costs incurred, and variance.

5. Develop an overhead variance analysis for October that identifies the variable overhead spending and efficiency variances and the fixed overhead budget and volume variances.

6. Prepare an analysis of the variances. Could a manager control some of the fixed costs? Defend your answer.

Standard Variable Actual Costs per Machine Hour (MH) Variable Costs in October Variable Overhead Costs $ 2,380 5,090 Indirect materials and supplies $1.10 Indirect machine setup labor Materials handling 2.50 1.40 3,950 2,980 Maintenance and repairs 1.50 1,490 Utilities 0.80 0.10 200 Miscellaneous $7.40 $16,090 Totals Budgeted Fixed Overhead Actual Fixed Overhead in October $ 3,630 Fixed Overhead Costs $ 3,630 Supervisory salaries Machine depreciation 8,360 8,580 Other 1,210 1,220 Totals $13,200 $13,430