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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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,700 50.16 per machine-hour $38,700+ $1.60 per machine-hour 50.80 per machine-hour $94,900 $68,500 $1.30 per machine-hour Actual Cost in March $ 22,180 $ 69,300 $ 18,200 $ 125,700 $ 70,200 During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 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: Utilities Maintenance Supplies Indirect labor Depreciation Cost Formula $16,700 50.16 per machine-hour $38,700+ $1.60 per machine-hour 50.80 per machine-hour $94,900 $68,500 $1.30 per machine-hour Actual Cost in March $ 22,180 $ 69,300 $ 18,200 $ 125,700 $ 70,200 During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 machine-hours during March. Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March.

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 7E: The management of Nova Industries Inc. manufactures gasoline and diesel engines through two...
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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: Utilities. Maintenance Supplies Indirect labor Depreciation Cost Formula $16,700+ $0.16 per machine-hour $38,700+ $1.60 per machine-hour $0.80 per machine-hour $94,900 $68,500 $1.30 per machine-hour Actual Cost in March $ 22,180 $ 69,300 $ 18,200 Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. $ 125,700 $ 70,200 During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 machine-hours during March.
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: Utilities. Maintenance Supplies Indirect labor Depreciation Cost Formula $16,700+ $0.16 per machine-hour $38,700+ $1.60 per machine-hour $0.80 per machine-hour $94,900 $68,500 $1.30 per machine-hour Actual Cost in March $ 22,180 $ 69,300 $ 18,200 Required: 1. Prepare a flexible budget for March. 2. Prepare a report showing the spending variances for March. $ 125,700 $ 70,200 During March, the company worked 21,000 machine-hours and produced 15,000 units. The company had originally planned to work 23,000 machine-hours during March.
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