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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 $ 24, 200 $ 78,100 8,400 $ 149,600 $ 71,500 Cost Formula Utilities Maintenance Supplies Indirect labor Depreciation $20,600 + $e.1e per machine-hour $40, 000 + $1.60 per machine-hour $0.30 per machine-hour $130,000 + $e.70 per machine-hour $70, 000 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Requlred: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending varlances 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: Actual Cost in March $ 24, 200 $ 78,100 8,400 $ 149,600 $ 71,500 Cost Formula Utilities Maintenance Supplies Indirect labor Depreciation $20,600 + $e.1e per machine-hour $40, 000 + $1.60 per machine-hour $0.30 per machine-hour $130,000 + $e.70 per machine-hour $70, 000 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Requlred: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending varlances for March.

Cornerstones of Cost Management (Cornerstones Series)
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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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 24 Cost Formula Utilities $20, 600 + se.10 per machine-hour $40,000 + $1.60 per machine-hour $0.30 per machine-hour $130,000 + $e.70 per machine-hour $70,000 24, 200 24 Maintenance 78,100 24 Supplies Indirect labor 8,400 $ 149,600 24 Depreciation 71,500 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Requlred: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending varlances 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 For the Month Ended March 31 Machine-hours Utilities Maintenance Supplies Indirect labor Depreciation Total
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 24 Cost Formula Utilities $20, 600 + se.10 per machine-hour $40,000 + $1.60 per machine-hour $0.30 per machine-hour $130,000 + $e.70 per machine-hour $70,000 24, 200 24 Maintenance 78,100 24 Supplies Indirect labor 8,400 $ 149,600 24 Depreciation 71,500 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally planned to work 30,000 machine-hours during March. Requlred: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending varlances 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 For the Month Ended March 31 Machine-hours Utilities Maintenance Supplies Indirect labor Depreciation Total
Required 1 Required 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 Total
Transcribed Image Text:Required 1 Required 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 Total
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