#11-23 You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door open- ing 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 follow- ing actual cost data for March: Actual Cost Cost Formula in March 24,200 78,100 $8.400 $20,600 plus $0.10 per machine-hour 40,000 plus $1.60 per machine-hour $0.30 per machine-hour $130,000 plus $0.70 per machine-hour 70,000 Utilities Supplies Indirect labor. $149,600 $71,500 During March, the company worked 26,000 machine-hours and produced 15.000 units. The company had originally planned to work 30,000 machine-hours during March. Prepare a report showing the activity variances for March. Explain what these variances mean. 2. Prepare a report showing the spending variances for March. Explain what these variances mean