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 $16,200 + $0.14 per machine-hour $ 20,660 Maintenance $38,300 + $1.60 per machine-hour $ 62,500 Supplies $0.30 per machine-hour $ 5,500 Indirect labor $94,700 + $2.10 per machine-hour $ 135,500 Depreciation $68,100 $ 69,800   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. Calculate the activity variances for March. 2. Calculate the spending variances for March.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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:

 

  Cost Formula Actual Cost in March
Utilities $16,200 + $0.14 per machine-hour $ 20,660
Maintenance $38,300 + $1.60 per machine-hour $ 62,500
Supplies $0.30 per machine-hour $ 5,500
Indirect labor $94,700 + $2.10 per machine-hour $ 135,500
Depreciation $68,100 $ 69,800

 

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. Calculate the activity variances for March.

2. Calculate the spending variances for March.

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My totals won't add up for the spending variances?

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I am not getting the correct answer for the total of the revenue and spending variances. Should I be excluding a number from my total? 

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