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: Cost Formula Actual Cost in March Utilities Maintenance Supplies Indirect labor $16,900 + $0.21 per machine-hour $38,100+ $1.70 per machine-hour $ 22,480 $ 62,500 $ 12,400 $0.70 per machine-hour $94,800 $67,700 $2.00 per machine-hour $ 131,700 Depreciation $ 69,400 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.
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: Cost Formula Actual Cost in March Utilities Maintenance Supplies Indirect labor $16,900 + $0.21 per machine-hour $38,100+ $1.70 per machine-hour $ 22,480 $ 62,500 $ 12,400 $0.70 per machine-hour $94,800 $67,700 $2.00 per machine-hour $ 131,700 Depreciation $ 69,400 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter5: Product And Service Costing: Job-order System
Section: Chapter Questions
Problem 27P: Firenza Company manufactures specialty tools to customer order. Budgeted overhead for the coming...
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Transcribed Image Text: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
Cost Formula
$ 22,480
Utilities
Maintenance
Supplies
$16,900 + $0.21 per machine-hour
$38,100+ $1.70 per machine-hour
$0.70 per machine-hour
$ 62,500
$ 12,400
$ 131,700
Indirect labor
Depreciation
$94,800+ $2.00 per machine-hour
$67,700
$69,400
During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work
18,000 machine-hours during March.
Required:
1. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Prepare a flexible budget for March. (Input all amounts as positive values.)
FAB Corporation
Flexible Budget
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