1A . 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 MarchUtilities $16,900 + $0.15 per machine-hour $ 21,400Maintenance $38,200 + $1.10 per machine-hour $ 51,800Supplies $0.50 per machine-hour $ 8,800Indirect labor $94,700 + $1.60 per machine-hour $ 124,400Depreciation $67,700 $ 69,400 During March, the company worked 16,000 machine-hours and produced 10,000 units. The company had originally planned to work 18,000 machine-hours during March. Required:

1. Prepare a flexible budget for March.

2. Prepare a report showing the spending variances for March.

2A. Marvel Parts, Inc., manufactures auto accessories. One of the companys products is a set of seat covers that can be adjusted to fit nearly any small car. The company uses a standard cost system for all of its products. According to the standards that have been set for the seat covers, the factory should work 1,005 hours each month to produce 2,010 sets of covers. The standard costs associated with this level of production are: Total Per Setof CoversDirect materials $ 28,542 $ 14.20 Direct labor $ 8,040 4.00 Variable manufacturing overhead (based on direct labor-hours) $ 3,618 1.80 $ 20.00 During August, the factory worked only 1,200 direct labor-hours and produced 2,600 sets of covers. The following actual costs were recorded during the month: Total Per Setof CoversDirect materials (6,000 yards) $ 35,100 $ 13.50 Direct labor $ 10,920 4.20 Variable manufacturing overhead $ 5,460 2.10 $ 19.80 At standard, each set of covers should require 2.0 yards of material. All of the materials purchased during the month were used in production. Required:

1. Compute the materials price and quantity variances for August.2. Compute the labor rate and efficiency variances for August.3. Compute the variable overhead rate and efficiency variances for August. (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.)