ezto.mheducation.com/hm.tpx 3 10.00 points You have just been hired by FAB Corpo
ID: 2467095 • Letter: E
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ezto.mheducation.com/hm.tpx 3 10.00 points 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 Cost Formula Utilities Supplies $0.40 per machine-hour Depreciation $67,700 in March $16,400 plus $0.16 per machine-hour $21,240 Maintenance $38,100 plus $1.60 per machine-hour 62,300 $ 7,400 Indirect labor $94,200 plus $1.80 per machine-hour $ 129,300 S 69,400 During March, the company worked 17,000 machine-hours and produced 11,000 units. The company had originally planned to work 19,000 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, "Ur for unfavorable, and "None" for 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 $ 21,242X F None Total 2. Complete the report showing the spending variances for March. (Indicate the effect of each variance selecting "F" for favorable, "U" for unfavorable, and-None" for no effect (ie.. ere variance) Input all amounts as positive values.) FAB CorporationExplanation / Answer
Actual
Spending variance
Flexible
(17,000MH)
Activity
Variance
Static budget
(19,000MH)
Utilities
21,240
2,120(U)
19,120
320(F)
19,440
Maintenance
62,300
3,000(F)
65,300
3,200(F)
68,500
Supplies
7,400
600(U)
6,800
800(F)
7,600
Indirect labor
129,300
4,500(U)
124,800
3,600(F)
128,400
Depreciation
69,400
1,700(U)
67,700
None
67,700
total
289,640
5,920(U)
283,720
7,920(F)
291,640
Actual
Spending variance
Flexible
(17,000MH)
Activity
Variance
Static budget
(19,000MH)
Utilities
21,240
2,120(U)
19,120
320(F)
19,440
Maintenance
62,300
3,000(F)
65,300
3,200(F)
68,500
Supplies
7,400
600(U)
6,800
800(F)
7,600
Indirect labor
129,300
4,500(U)
124,800
3,600(F)
128,400
Depreciation
69,400
1,700(U)
67,700
None
67,700
total
289,640
5,920(U)
283,720
7,920(F)
291,640
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