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 | $16,900 plus $0.21 per machine-hour | $ | 22,270 |
| Maintenance | $38,400 plus $1.20 per machine-hour | $ | 52,600 |
| Supplies | $0.60 per machine-hour | $ | 10,000 |
| Indirect labor | $94,600 plus $1.30 per machine-hour | $ | 117,600 |
| Depreciation | $68,500 | $ | 70,200 |
During March, the company worked 15,000 machine-hours and produced 9,000 units. The company had originally planned to work 17,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
In: Accounting
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 | $16,300 plus $0.14 per machine-hour | $ | 20,900 |
| Maintenance | $38,600 plus $1.10 per machine-hour | $ | 54,400 |
| Supplies | $0.60 per machine-hour | $ | 11,800 |
| Indirect labor | $94,800 plus $1.30 per machine-hour | $ | 121,700 |
| Depreciation | $68,300 | $ | 70,000 |
During March, the company worked 18,000 machine-hours and produced 12,000 units. The company had originally planned to work 20,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
In: Accounting
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 | $16,700 + $0.12 per machine-hour | $ | 20,420 |
| Maintenance | $38,600 + $1.40 per machine-hour | $ | 54,800 |
| Supplies | $0.30 per machine-hour | $ | 4,600 |
| Indirect labor | $94,400 + $1.10 per machine-hour | $ | 112,900 |
| Depreciation | $68,500 | $ | 70,200 |
During March, the company worked 14,000 machine-hours and produced 8,000 units. The company had originally planned to work 16,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
In: Accounting
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 | $16,900 + $0.21 per machine-hour | $ | 22,690 |
| Maintenance | $38,700 + $1.30 per machine-hour | $ | 57,200 |
| Supplies | $0.60 per machine-hour | $ | 11,200 |
| Indirect labor | $94,400 + $1.70 per machine-hour | $ | 127,600 |
| Depreciation | $68,400 | $ | 70,100 |
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.
In: Accounting
ou 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 | $16,300 plus $0.12 per machine-hour | $ | 20,620 |
| Maintenance | $38,500 plus $1.90 per machine-hour | $ | 72,200 |
| Supplies | $0.80 per machine-hour | $ | 16,600 |
| Indirect labor | $94,600 plus $1.80 per machine-hour | $ | 133,300 |
| Depreciation | $68,000 | $ | 69,700 |
During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March
In: Accounting
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 plus $0.17 per machine-hour | $ | 20,450 |
| Maintenance | $38,800 plus $1.60 per machine-hour | $ | 56,600 |
| Supplies | $0.90 per machine-hour | $ | 13,300 |
| Indirect labor | $94,900 plus $1.80 per machine-hour | $ | 122,800 |
| Depreciation | $67,700 | $ | 69,400 |
During March, the company worked 13,000 machine-hours and produced 7,000 units. The company had originally planned to work 15,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
In: Accounting
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 | $16,700 plus $0.20 per machine-hour | $ | 23,100 |
| Maintenance | $38,100 plus $1.30 per machine-hour | $ | 61,800 |
| Supplies | $0.60 per machine-hour | $ | 13,600 |
| Indirect labor | $94,500 plus $1.60 per machine-hour | $ | 132,200 |
| Depreciation | $68,200 | $ | 69,900 |
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.
In: Accounting
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 | $16,300 plus $0.19 per machine-hour | $ | 21,710 |
| Maintenance | $38,300 plus $1.20 per machine-hour | $ | 54,900 |
| Supplies | $0.80 per machine-hour | $ | 15,000 |
| Indirect labor | $94,900 plus $2.00 per machine-hour | $ | 133,800 |
| Depreciation | $67,800 | $ | 69,500 |
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. Prepare a flexible budget for March.
2. Prepare a report showing the spending variances for March.
In: Accounting
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 plus $0.14 per machine-hour | $ | 20,840 |
| Maintenance | $38,800 plus $1.50 per machine-hour | $ | 64,100 |
| Supplies | $0.70 per machine-hour | $ | 14,500 |
| Indirect labor | $94,500 plus $2.00 per machine-hour | $ | 137,400 |
| Depreciation | $67,700 | $ | 69,400 |
During March, the company worked 19,000 machine-hours and produced 13,000 units. The company had originally planned to work 21,000 machine-hours during March.
Required:
1. Calculate the activity variances for March.
2. Calculate the spending variances for March.
In: Accounting
Closing the Balances in The Variance Accounts at the End of the Year
Yohan Company has the following balances in its direct materials and direct labor variance accounts at year-end:
| Debit | Credit | |
| Direct Materials Price Variance | $13,450 | |
| Direct Materials Usage Variance | $1,150 | |
| Direct Labor Rate Variance | 800 | |
| Direct Labor Efficiency Variance | $12,340 | |
Unadjusted Cost of Goods Sold equals $1,520,000, unadjusted Work in Process equals $286,000, and unadjusted Finished Goods equals $270,000.
What if any ending balance in a variance account that exceeds $9,000 is considered material? (a) Close the immaterial variance accounts to Cost of Goods Sold. (b) Prorate the largest of the labor variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. (c) Prorate the largest of the material variances among Cost of Goods Sold, Work in Process, and Finished Goods on the basis of prime costs in these accounts. The prime cost in Cost of Goods Sold is $1,050,000, the prime cost in Work in Process is $160,200, and the prime cost in Finished Goods is $128,000. If an amount box does not require an entry, leave it blank or enter "0".
Note: Round all interim calculations to three decimal places, and round your final answers to the nearest dollar. Adjust credit entry for rounding to ensure debits equal credits in journal entry.
| (a) | Direct Materials Usage Variance | ||
| Direct Labor Rate Variance | |||
| Cost of Goods Sold | |||
| (b) | Work in Process | ||
| Finished Goods | |||
| Cost of Goods Sold | |||
| Direct Labor Efficiency Variance | |||
| (c) | Work in Process | ||
| Finished Goods | |||
| Cost of Goods Sold | |||
| Direct Materials Price Variance |
What are the adjusted balances in Work in Process, Finished Goods, and Cost of Goods Sold after closing out all variances?
| Adjusted balance | |
| Work in Process | $ |
| Finished Goods | $ |
| Cost of Goods Sold | $ |
In: Accounting