1.

Jakes Roof Repair has provided the following data concerning its costs:

	Fixed Cost per Month			Cost per Repair-Hour
Wages and salaries	$	21,000		$	15.00
Parts and supplies				$	7.60
Equipment depreciation	$	2,710		$	0.50
Truck operating expenses	$	5,750		$	1.80
Rent	$	4,680
Administrative expenses	$	3,860		$	0.70

For example, wages and salaries should be $21,000 plus $15.00 per repair-hour. The company expected to work 2,600 repair-hours in May, but actually worked 2,500 repair-hours. The company expects its sales to be $49.00 per repair-hour.

Required:

Compute the companys activity variances for May. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

2.

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 companys 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	$16,000 plus $0.20 per machine-hour	$	22,400
Maintenance	$38,000 plus $1.30 per machine-hour	$	61,700
Supplies	$0.50 per machine-hour	$	11,300
Indirect labor	$94,300 plus $2.00 per machine-hour	$	141,200
Depreciation	$68,100	$	69,800

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.