Pad 21% 6:40 PM ezto.mheducation.com alue: 10.00 points You have just been hired
ID: 2571846 • Letter: P
Question
Pad 21% 6:40 PM ezto.mheducation.com alue: 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 21,550 70,500 15,000 118,300 69,500 Cost Formula $16,900 plus $0.15 per machine-hour Utilities Maintenance $38,700 plus $2.00 per machine-hour Supplies Indirect labor $94,600 plus $1.20 per machine-hour Depreciation $67,800 $0.80 per machine-hour 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. Prepare a flexible budget for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) FAB Corporation Flexible Budget For the Month Ended March 31 Utilities Maintenance Supplies Indirect labor Depreciation Total 2. Prepare a report showing the spending variances for March. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for 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 TotalExplanation / Answer
Answer:
1)
Prepare the flexible budget for march
FAB Corporation
flexible budget for march
For the month ended March-31
Amount $
Utility 16900+(0.15*17000)
18550
maintenance 38700+(2*17000)
72700
Supply (0.8*1700)
13600
Indirect Labor 94600+(1.2*17000)
115000
Depreciation
67800
Total
287650
____________________________________________-
2
Spending variance for the march
FAB Corporation
flexible budget for march
For the month ended March-31
Spending
variance
Utility
3000
Unfavorable
maintenance
2200
favorable
Supply
1400
Unfavorable
Indirect Labor
3300
Unfavorable
Depreciation
1700
Unfavorable
Total
7200
Unfavorable
Working notes for the above answer
FAB Corporation
flexible budget for march
For the month ended March-31
Flexible
budget
Actual
Spending
variance
A
B
C=A-B
Utility
18550
21550
3000
Unfavorable
maintenance
72700
70500
2200
favorable
Supply
13600
15000
1400
Unfavorable
Indirect Labor
115000
118,300
3300
Unfavorable
Depreciation
67800
69500
1700
Unfavorable
Total
287650
294850
7200
Unfavorable
FAB Corporation
flexible budget for march
For the month ended March-31
Amount $
Utility 16900+(0.15*17000)
18550
maintenance 38700+(2*17000)
72700
Supply (0.8*1700)
13600
Indirect Labor 94600+(1.2*17000)
115000
Depreciation
67800
Total
287650
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.