Problem 9-20 Activity and Spending Variances [Lo9-1, Lo9-2, LO9-3 just been hire

Question

Problem 9-20 Activity and Spending Variances [Lo9-1, Lo9-2, LO9-3 just been hired by FAB Corpor ration, the 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 an excellent first step in overhead planning and control $ 24,200 78,100 Buppliers $0.30 per s 71,500 During March, the company worked 26,000 machine-hours and produced 15.000 units. The company 30,000 machine-hours during March had originally planned to work 2. Calculate the by Activity Varlances

Explanation / Answer

Fab Corporation Activity Variances For the Month ended 31 march Utilities 400 F Maintainance 6400 F Supplies 1200 F Indirect Labor 2800 F Depriciation 0 None Total 10800 F FAB Corporation Activity Variances For the Month Ended March 31 Flexible Budget Planning Budget Activity Variances   Machine-hours (q) 26000 30000      Utilities ($20,600 + $0.10q) 23200 23600 400 F   Maintenance ($40,000 + $1.60q) 81600 88000 6400 F   Supplies ($0.30q) 7800 9000 1200 F   Indirect labor ($130,000 + $.70q) 148200 151000 2800 F   Depreciation ($70000) 70000 70000 0 None   Total 330800 341600 10800 F Fab Corporation Spending Variances For the Month ended 31 march Utilities -1000 U Maintainance 3500 F Supplies -600 U Indirect Labor -1400 U Depriciation -1500 U Total -1000 U FAB Corporation Spending Variances For the Month Ended March 31 Actual Results Flexible Budget Spending Variances   Machine-hours (q) 26000 26000   Utilities ($20,600 + $0.10q) 24200 23200 -1000 U   Maintenance ($40,000 + $1.60q) 78100 81600 3500 F   Supplies ($0.30q) 8400 7800 -600 U   Indirect labor ($130,000 + $.70q) 149600 148200 -1400 U   Depreciation ($71500) 71500 70000 -1500 U   Total 331800 330800 -1000 U

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