value: 10.00 points You have just been hired by FAB Corporation, the manufacture

Question

value: 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 in March $ 21,160 $ 59,800 $ 14,200 $116,600 $ 69,600 Cost Formula Utilities Maintenance Supplies Indirect labor Depreciation $67,900 $16,800 plus $0.16 per machine-hour $38,800 plus $1.70 per machine-hour $0.90 per machine-hour $94,900 plus $1.30 per machine-hour During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work 16,000 machine-hours during March

Explanation / Answer

1 Flexible budget Utilities 19040 =16800+(14000*0.16) Maintenance 62600 =38800+(14000*1.7) Supplies 12600 =14000*0.9 Indirect labor 113100 =94900+(14000*1.3) Depreciation 67900 Total 275240 2 Spending variances Utilities 2120 U Maintenance 2800 F Supplies 1600 U Indirect labor 3500 U Depreciation 1700 U Total 6120 U

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