Problem 920 Activity and Spending Variances LO91 LO92 LO93 Y

Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3) 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. ok After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: nt Actual Cost irn March 21,990 $ 65,900 14,500 Cost Formula Utilities Maintenance Supplies $16,200 plus $0.19 per machine-hour $38,500 plus $1.60 per machine-hour nces $0.70 per machine-hour Indirect labor $94,100 plus 1.40 per machine-hour $124,400 Depreciation$68,200 69,900 During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to swork 21,000 machine-hours during March. Required: 1. Calculate the activity variances for March. 2. Calculate the spending variances for March. Complete this question by entering your answers in the tabs below Required 1Required 2 Calculate the activity variances for March. (Indicate the effect of each variance by selecting \"F\" for fav unfavorable, and \"None\" for no effect (i.e., zero variance). Input all amounts as positive values.) FAB Corporation K Prev18 of 19 Next>

Solution

Particulars Cost formula Actual Spending variance Flexible budget Activity variance Static budget Machine hours 19000 19000 21000 Expenses Utilities 16200+.19q 21990 2180 U 19810 380 F 20190 Maintenance 38500+1.6q 65900 3000 F 68900 3200 F 72100 Supplies .7q 14500 1200 U 13300 1400 F 14700 Indirect labor 94100+1.4q 124400 3700 U 120700 2800 F 123500 Depreciation 68200 69900 1700 U 68200 0 68200 Total expense 296690 5780 U 290910 7780 F 298690