Question
In: Accounting
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB...
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. 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 $16,100 + $0.16 per machine-hour $ 21,580 Maintenance $38,200 + $1.30 per machine-hour $ 61,900 Supplies $0.30 per machine-hour $ 6,700 Indirect labor $94,400 + $1.60 per machine-hour $ 132,100 Depreciation $67,800 $ 69,500 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. Calculate the activity variances for March.
2. Calculate the spending variances for March.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB...
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...
Problem 9-20 Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by FAB...
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...
Problem 9-18 (Algo) Activity and Spending Variances [LO9-1, LO9-2, LO9-3] You have just been hired by...
Problem 9-18 (Algo) 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...
Exercise 9-16 Flexible Budgets and Revenue and Spending Variances [LO9-1, LO9-3] Via Gelato is a popular...
Exercise 9-16 Flexible Budgets and Revenue and Spending
Variances [LO9-1, LO9-3]
Via Gelato is a popular neighborhood gelato shop. The company
has provided the following cost formulas and actual results for the
month of June:
Fixed Element
per Month
Variable Element
per Liter
Actual Total
for June
Revenue
$
12.00
$
71,540
Raw materials
$
4.65
$
29,230
Wages
$
5,600
$
1.40
$
13,860
Utilities
$
1,630
$
0.20
$
3,270
Rent
$
2,600
$
2,600
Insurance
$
1,350...
Case 9-31 Master Budget with Supporting Schedules [LO9-2, LO9-4, LO9-8, LO9-9, LO9-10] You have just been...
Case 9-31 Master Budget with Supporting Schedules
[LO9-2, LO9-4, LO9-8, LO9-9, LO9-10]
You have just been hired as a new management trainee by Earrings
Unlimited, a distributor of earrings to various retail outlets
located in shopping malls across the country. In the past, the
company has done very little in the way of budgeting and at certain
times of the year has experienced a shortage of cash.
Since you are well trained in budgeting, you have decided to
prepare comprehensive...
Case 9-31 Master Budget with Supporting Schedules [LO9-2, LO9-4, LO9-8, LO9-9, LO9-10] You have just been...
Case 9-31 Master Budget with Supporting Schedules [LO9-2, LO9-4,
LO9-8, LO9-9, LO9-10]
You have just been hired as a new management trainee by Earrings
Unlimited, a distributor of earrings to various retail outlets
located in shopping malls across the country. In the past, the
company has done very little in the way of budgeting and at certain
times of the year has experienced a shortage of cash.
Since you are well trained in budgeting, you have decided to
prepare comprehensive...
Item 3 Item 3 You have just been hired by FAB Corporation, the manufacturer of a...
Item 3
Item 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.
After...
Problem 9-20 (Algo) Critique a Report; Prepare a Performance Report [LO9-1, LO9-2, LO9-3, LO9-4] TipTop Flight...
Problem 9-20 (Algo) Critique a Report; Prepare a Performance
Report [LO9-1, LO9-2, LO9-3, LO9-4]
TipTop Flight School offers flying lessons at a small municipal
airport. The school’s owner and manager has been attempting to
evaluate performance and control costs using a variance report that
compares the planning budget to actual results. A recent variance
report appears below:
TipTop Flight School
Variance Report
For the Month Ended July 31
Actual
Results
Planning
Budget
Variances
Lessons
145
140
Revenue
$
33,110
$...
Exercise 9-9 Prepare a Report Showing Revenue and Spending Variances [LO9-2] Lavage Rapide is a Canadian...
Exercise 9-9 Prepare a Report Showing Revenue and Spending
Variances [LO9-2]
Lavage Rapide is a Canadian company that owns and operates a
large automatic car wash facility near Montreal. The following
table provides data concerning the company’s costs:
Fixed Cost
per Month
Cost per
Car Washed
Cleaning supplies
$
0.80
Electricity
$
1,200
$
0.15
Maintenance
$
0.20
Wages and salaries
$
5,000
$
0.30
Depreciation
$
6,000
Rent
$
8,000
Administrative expenses
$
4,000
$
0.10
For example, electricity...
Exercise 9-13 Revenue and Spending Variances [LO9-3] Lavage Rapide is a Canadian company that owns and...
Exercise 9-13 Revenue and Spending Variances [LO9-3]
Lavage Rapide is a Canadian company that owns and operates a
large automatic car wash facility near Montreal. The following
table provides data concerning the company’s costs:
Fixed Cost
per Month
Cost per
Car Washed
Cleaning supplies
$
0.60
Electricity
$
1,100
$
0.07
Maintenance
$
0.20
Wages and salaries
$
4,400
$
0.40
Depreciation
$
8,200
Rent
$
2,000
Administrative expenses
$
1,700
$
0.05
For example, electricity costs are $1,100 per...
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